The Greenback recovered against the Japanese Yen on Wednesday, rallying over 2% after Japanese Prime Minister Ishiba commented the economic environment is not ready for additional rate hikes. The USD/JPY jumped off daily lows of around 143.42 and soared sharply toward current exchange rates.
USD/JPY trades around 143.80 on Wednesday. Analysis of the daily chart indicates that the pair consolidates within an ascending channel pattern, suggesting a bullish bias. The 14-day Relative Strength Index (RSI) also hovers slightly below the 50 level. A breakout above this threshold would further confirm the bullish trend's continuation.
The USD/JPY pair may encounter resistance near the upper boundary of the ascending channel at 146.80, followed by the five-week high of 147.21, last reached on 3 September 2024.
On the downside, immediate support appears at the nine-day Exponential Moving Average (EMA) around 143.50, followed by the lower boundary of the ascending channel at 143.00. A break below this level could push the USD/JPY pair toward the 139.58 level, marking the lowest since June 2023.
The Japanese Yen (JPY) edges lower against the US Dollar (USD) on Wednesday as rising doubts over further interest rate hikes by the Bank of Japan (BoJ). On Tuesday, BoJ’s Summary of Opinions from September’s Monetary Policy Meeting indicates no immediate plans for additional rate hikes. The central bank intends to maintain its accommodative stance but remains open to adjustments if economic conditions show significant improvement.
Japan's Economic Revitalization Minister Ryosei Akazawa stated on Wednesday that Prime Minister Shigeru Ishiba anticipates the Bank of Japan will conduct thorough economic evaluations before raising interest rates again. In his first news conference as the economy minister, Akazawa emphasized, "Our top priority is to ensure that Japan fully exits deflation, adding that "it will take some time to achieve a complete exit.
The US Dollar receives support from the cautious mood in the market amid the escalating tension in the Middle East. However, the weaker-than-expected ISM Manufacturing PMI for September might have put downward pressure on the Greenback. Traders will now focus on the upcoming US ADP Employment Change and Fedspeak for further direction.
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