News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Further your forex knowledge and gain insights from our expert analyst @nickcawley1 on $GBP with our free Q4 market analysis guide, available for free today.https://t.co/upAUgK4jC9 #Dailyfxguides https://t.co/e579byaUNq
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 91.28%, while traders in AUD/JPY are at opposite extremes with 78.66%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/QHxa0qBpGh
  • (ASEAN Fundy) US Dollar Forecast: Turning Point Reached? USD/SGD, USD/THB, USD/IDR, USD/PHP #USD $USDGSD $USDTHB $USDIDR $USDPHP https://www.dailyfx.com/forex/fundamental/article/special_report/2021/10/25/US-Dollar-Forecast-Turning-Point-Reached-USDSGD-USDTHB-USDIDR-USDPHP.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/87N97EGWdr
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/N2GqH7QoOd
  • RT @mkraju: Manchin signaling he’s open to $1.75T for social safety net bill, per source briefed on matter, but it’s unclear where the pric…
  • Further your forex knowledge and gain insights from our expert analysts @JohnKicklighter and @JStanleyFX on $USD with our free Q4 market analysis guide, available for free today. https://t.co/7G7pWntiyY #DailyFXGuides https://t.co/XYCRng3hEW
  • RT @JournalistRoss: From CNN's @mkraju: The goal among Democratic leaders is to have a vote Wednesday or Thursday on the infrastructure pac…
  • *Reminder: Weekly Strategy Webinar tomorrow at 8:30am ET on @DailyFX !! https://t.co/lxd5fZnn4H
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/L15w1dzclc
  • Wow Liverpool... https://t.co/9Mx6Xmw4iS
USD/JPY Rate Eyes September High Amid Ongoing Rise in US Yields

USD/JPY Rate Eyes September High Amid Ongoing Rise in US Yields

David Song, Strategist

Japanese Yen Talking Points

USD/JPY approaches the September high (112.08) as the 10-Year US Treasury yield climbs to a fresh monthly high (1.57%), and current market conditions may keep the exchange rate afloat amid the deviating paths between the Bank of Japan (BoJ) and Federal Reserve.

Advertisement

USD/JPY Rate Eyes September High Amid Ongoing Rise in US Yields

USD/JPY extends the series of higher highs and lows from the start of the week to largely track the ongoing advance in longer-dated Treasury yields, and the exchange rate may stage another attempt to test the 2020 high (112.23) as the Non-Farm Payrolls (NFP) report is anticipated to show a further improvement in the labor market.

Image of DailyFX Economic Calendar for US

The update is anticipated to show the US economy adding 473K jobs in September following the 235K expansion the month prior, while the jobless is expected to narrow to 5.1% from 5.2% during the same period, which would mark the lowest reading since March 2020.

A positive development may generate a bullish reaction in the US Dollar as it puts pressure on the Federal Open Market Committee (FOMC) to switch gears sooner rather than later, and USD/JPY may continue to exhibit a bullish trend ahead of the next Fed interest rate decision on November 3 as the BoJ sticks to its easing cycle.

In turn, USD/JPY may continue to trade to fresh yearly highs over the remainder of the 2021 amid speculation for a looming shift in Fed policy, but a further advance in the exchange rate may fuel the flip in retail sentiment like the behavior seen earlier this year.

Image of IG Client Sentiment for USD/JPY rate

The IG Client Sentiment report shows 35.31% of traders are net-long USD/JPY, with the ratio of traders short to long standing at 1.83 to 1.

The number of traders net-long is 8.88% lower than yesterday and 23.70% higher from last week, while the number of traders net-short is 4.61% higher than yesterday and 23.51% lower from last week. The jump in net-long interest has helped to alleviate the tilt in retail sentiment as only 27.83% of traders were net-long USD/JPY last week, while the decline in net-short position comes as the exchange rate extends the series of higher highs and lows from the start of the week.

With that said, USD/JPY appears to be on track to test the September high (112.08) amid the rise in US yields, and the NFP report may lead to another test of the 2020 high (112.23) if the update fuels speculation for an imminent shift in Fed policy.

USD/JPY Rate Daily Chart

Image of USD/JPY rate daily chart

Source: Trading View

  • The broader outlook for USD/JPY remains constructive as it trades to fresh yearly highs in the second half of 2021, with the 200-Day SMA (108.55) indicating a similar dynamic as it retains the positive slope from earlier this year.
  • In turn, USD/JPY appears to be on track to test the September high (112.08) as it extends the series of higher highs and lows from the start of the week, but need a close above the Fibonacci overlap around 111.10 (61.8% expansion) to 111.60 (38.2% retracement) to raise the scope for another test of the 2020 high (112.23).
  • A break above the 2020 high (112.23) to open up the overlap around 112.40 (61.8% retracement) to 112.80 (38.2% expansion), with the next area of interest coming in around 113.80 (23.6% expansion) to 114.30 (23.6% retracement).
  • However, lack of momentum to close above the overlap around 111.10 (61.8% expansion) to 111.60 (38.2% retracement) may push USD/JPY back towards the 110.70 (38.2% expansion) region, with the next area of interest coming around 109.40 (50% retracement) to 110.00 (78.6% expansion).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES