The USD/JPY pair rose back above 144.00 JPY/USD on October 1, after falling slightly due to unclear Japanese economic data and the Bank of Japan (BoJ) being hawkish on the possibility of a rate hike, according to FXStreet. The USD's appreciation is boosting the pair.
Earlier, in the trading session on Monday, September 30, the USD/JPY pair rose slightly to 143.00. This increase was partly due to dovish comments from Japan's new Prime Minister, Shigeru Ishiba, after he won the election on September 27. Ishiba said that monetary policy should continue to support the economy in the current context.
Investors are focusing on the BoJ's report on its monetary policy meeting on September 20. During this meeting, the BoJ kept interest rates unchanged at 0.1%-0.25% and said future decisions would depend on the economic situation.
The US dollar also recovered slightly, pushing the USD/JPY pair higher. The US dollar index (DXY), which tracks the greenback against six other currencies, rose to near 100.50.
USD/JPY rose in late trading yesterday, gaining more than 1% after Federal Reserve Governor Jerome Powell spoke at the latest meeting.
The Fed governor said inflation has broadly returned to pre-pandemic levels, adding that job creation has fallen "very significantly" and said there is no need to accelerate rate cuts.
When the Fed does not lower interest rates, the USD becomes attractive because of its high yield, while Japan keeps interest rates low to support its economy. This interest rate differential causes investors to shift capital into the USD, making the USD stronger and the JPY weaker. As a result, the USD/JPY pair rises, meaning the USD appreciates against the JPY.
In the coming days, if USD/JPY breaks above 144.00, the next resistance will be at 145.00, followed by the 50-day moving average (DMA) at 145.92. The next stop will be the bottom of the Kumo pattern around 148.00-148.20.
Conversely, if USD/JPY remains below 144.00, the exchange rate will retreat to 143.46. Immediately after this level is 143.39, followed by 143.00.
According to Lao Dong, at 12:00 on October 1, the exchange rate of the Japanese Yen against the US dollar is currently hovering around the highest low of the day at 144.41 JPY/USD and the lowest at 143.38 JPY/USD.
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