Japanese Yen Weakens Amid Global Risks: USD/JPY Yearly High

Japanese Yen Weakens Amid Global Risks: USD/JPY Approaches Yearly High as Middle East Conflicts Heighten Market Concerns.

The Japanese Yen shows signs of weakness, prompting speculation about the Bank of Japan’s (BoJ) response amid global risks. USD/JPY is approaching its yearly high of 150.16, driven by a strong US Dollar and rising Treasury yields. Concerns about escalating conflicts in the Middle East are pressuring risk and growth-oriented assets.

In Asia, the benchmark 10-year note reached its highest yield since 2007, nearing 5%. Federal Reserve Chair Jerome Powell’s upcoming speech is anticipated, especially regarding its impact on Fed funds target rates amid surging US government bond yields.

Japanese Yen Weakens Amid Global Risks

Meanwhile, former BoJ board member Makoto Sakurai suggested the possibility of the BoJ abandoning negative interest rates, focusing instead on yield curve control (YCC). Japanese Government Bonds (JGB) yields rose to 0.84%, the highest since 2013. The BoJ has scheduled its monetary policy meeting for October 31st.

Crude oil prices eased after reaching a two-week high due to the US Treasury Department’s announcement of suspending sanctions on Venezuelan oil, gas, gold, and bonds. Gold prices surged above US$1,962 amid uncertainty in Middle East diplomacy.

The Australian Dollar declined following a mixed jobs report, where the unemployment rate fell to 3.6% from 3.7%, driven by part-time job gains and reduced full-time jobs due to lower participation rates. APAC equities mirrored Wall Street’s decline, with major indices down over 1.5%. Investors expect challenges to impact European and North American equity markets.

USD/JPY Technical Analysis

USD/JPY is approaching its 12-month high, with potential for a breakout towards the 33-year peak at 151.95. This upward momentum might trigger intervention by the Bank of Japan.

The bullish triple moving average (TMA) formation indicates positive momentum, with short-term SMA above medium-term SMA and medium-term SMA above long-term SMA. Support levels include recent lows near 147.30 and 145.90, with further support at 145.05 – 145.10 and prior lows near 144.50 and 141.50.

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