By Samir Al Khoury,
The price of the US dollar against the Japanese yen recorded 159.12 today, marking its highest level since April 29, 2024. This currency pair continues its upward trend for the seventh consecutive day, up by about 13% year-to-date. The next significant challenge is reaching the 160.20 level, last recorded on April 29, 2024.
Japan’s headline consumer price index rose to 2.8% annually, higher than the previous reading of 2.5%. The core CPI, excluding food, increased to 2.5%, slightly below expectations (2.6%) but higher than the previous 2.2% reading. These figures suggest that the Bank of Japan may maintain interest rates at 0.1% in its July meeting, especially with plans to reduce bond purchases next month.
The divergence between Japanese and US government bond yields continues to influence the dollar-yen exchange rate. For instance, the 10-year Japanese government bond yield is around 0.98%, while the 10-year US Treasury bond yield is approximately 4.24%, creating a 3.26% gap that supports carry trade strategies.
From a technical standpoint, the upward trajectory for the dollar against the yen seems set to continue. The 20-, 50-, and 200-day moving averages are in an upward trend, with the 20-day average above the 50-day average and the 50-day average above the 200-day average. The Relative Strength Index (RSI) stands at 65 points, indicating upward momentum for the dollar against the yen.
If the yen-dollar pair breaks the 158.59 pivot point, it may target support levels at 158.23, 157.56, and 157.20. Conversely, surpassing the pivot point could lead to targeting resistance levels at 159.26, 159.62, and 160.29.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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