Yen plummets, down to its lowest level in many months
On January 10, the Japanese Yen (JPY) is weak against the US Dollar (USD). The USD/JPY pair is currently trading near its highest level in many months at the beginning of the week.
Despite signs of rising inflationary pressures in Japan, investors are still uncertain when the Bank of Japan (BoJ) will raise interest rates. In addition, the Fed's maintaining the view of increasing interest rates has caused the US-Japan yield gap to increase, reducing the attraction of the low-yielding Yen.
However, market concerns, along with the risk of a trade war and the tense geopolitical situation caused by the Russia-Ukraine conflict, could support the Yen as a safe-haven asset. Speculation about the possibility of the Japanese government intervening to raise the Yen has also made investors not dare to bet heavily on selling the JPY. However, the JPY's decline is still limited by strong USD and expectations that the US jobs report (NFP) will be positive.
Japan's economy minister said the country's economy is at an important stage, needing to eliminate the deflationary mentality and promote growth based on salary increases and investment.
However, data showed that actual household spending fell 0.4% in November, marking the fourth consecutive month of decline due to high prices. curbs have also fallen four months in a row, suggesting inflation remains a major problem. This has led many to expect the BoJ to raise interest rates in early 2025. However, some investors expect the BoJ to wait until April, after the results of the salary negotiations between companies and trade unions.
Meanwhile, US government bond yields remain near last year's highest level as the Fed maintains its view of raising interest rates. Statements from Fed officials also show that interest rates may decrease gradually and based on economic data.
Forecast of the Yen trend
The USD remains strong near a two-year high, helping the USD/JPY pair maintain above 158.00. The bulls are in control and can aim for the target of 159.00, or even 160.00 if they surpass the current resistance levels.
Conversely, if prices decrease, the 157.60 area will be the nearest support level. If this area is broken, USD/JPY could continue to fall to 157.00 or further, moving towards a downward trend in the short term.
According to Lao Dong, updated at 3:00 p.m. on January 10, the USD/JPY exchange rate is currently fluctuating around 158.385 USD/JPY, meaning 1 USD can be exchanged for about 158 JPY.
