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- The US dollar started the last quarter of 2023 strong as the prospect of a longer US interest rate hike provided strong support, pushing the Japanese yen to its lowest level in 11 months.
- The gains of the currency pair US Dollar against the Japanese Yen (USD/JPY) reached the resistance level of 149.82, its highest level in 11 months, and the closest point of the psychological resistance of 150.00.
- The markets will test Japan’s hints about the possibility of intervention in the markets or that it has changed the threshold for intervention.
In general, at the beginning of this week’s trading, currency movements were weak in early Asian trading, with parts of Australia leaving for vacation and China leaving for its golden week, although analysts said that the narrowly avoided US government shutdown may bring some relief to the markets.
In the Forex currency market, the euro lost 0.08% to $1.0535, after ending the previous quarter with a decline of 3%, which is its worst performance in a year. The pound sterling fell in recent transactions by 0.13% to $1.2188, after it similarly fell by about 4% against the dollar in the third quarter. However, the US Dollar Index (DXY) was not far from its 10-month high last at 106.24, after recording its best quarterly performance in a year last month thanks to the Fed’s continued hawkish rhetoric.
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For its part, the US Congress late on Saturday passed a temporary funding bill with overwhelming support from Democrats in an attempt to avoid the fourth partial shutdown of the federal government in a decade, a move that Pepperstone’s head of research, Chris Weston, said “should be welcomed by risk assets.” “. He added: “We now also have a firm understanding that the US Department of Labor will release US non-farm payrolls data on Friday, in addition to the US CPI report on October 12, which perhaps would not have happened if (the government) had been closed.” “This puts the November 1 FOMC meeting on the table again as a potential venue for raising US interest rates by another 25 basis points.”
According to the performance on the daily chart below, the general trend of the USD/JPY pair is still bullish. It may remain so until the announcement of important US jobs numbers at the end of the week or a sudden Japanese intervention in the markets to prevent a further collapse of the price of the Japanese yen against the rest of the currencies. The other major ones, especially against the US dollar. Currently, I prefer to sell the USD/JPY from every rising level rather than risk buying from peaks where Japanese government intervention is expected. If this happens, sales will be strong and sharp.
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