The Japanese Yen has recently experienced a decline against the US Dollar, influenced by a mix of economic factors. The resurgence of US bond yields, coupled with a positive sentiment in the equity markets, has led to increased demand for the US Dollar, pushing the USD/JPY exchange rate back into the mid-150s. This shift comes after the Yen briefly strengthened, reaching its highest level since late October.
The fluctuations in the USD/JPY exchange rate are partially attributed to market reactions to recent geopolitical developments. An announcement regarding the potential imposition of 100% tariffs on BRICS nations by the US President-elect has rekindled concerns about global trade tensions. This situation has contributed to a rise in USD demand, as traders react to the anticipated impact of these tariffs on the economy. Investors are speculating that aggressive tariff policies could lead to higher consumer prices, prompting the Federal Reserve to reconsider its stance on interest rates.
Despite the Yen’s current struggles, ongoing geopolitical tensions and expectations of a possible interest rate cut by the Bank of Japan in December may limit significant losses. Observers are closely watching this week’s macroeconomic releases from the US, including the Manufacturing PMI and the critical employment report, for insights into future monetary policy directions.
From a technical standpoint, the US Dollar faces significant resistance near the 151.00 threshold, which may hinder any upward movement. If the USD manages to break through this level, it could trigger a rally, pushing it towards the 152.00 level, a crucial pivot linked to the 200-day Simple Moving Average. Conversely, should the USD/JPY retreat, the 150.00 psychological level is anticipated to act as a support barrier, with further declines leading towards additional support around 149.00 and 147.60-147.55.
