The exchange rate looks at the current pace to challenge the yearly peak (139.39) after surpassing the starting range for August as USD/JPY rises for five straight days while continuing the week’s string of greater highs and lows. As it moves to a new monthly peak (137.65), USD/JPY mostly tracks the increase in US Treasury yields. Additionally, the currency pair appears ready to follow the upward slope of the fifty-Day SMA (135.55) as it moves back just above the rolling average.
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In light of this, if USD/JPY can surpass the annual high (139.39), this could attempt to check the high from September 1998. Additionally, the divergent paths that the Federal Reserve has taken and the Bank of Japan (BoJ) could help to support the exchange rate in the months ahead as Chairman Jerome Powell and Co. adopt a constrictive policy. The fundamental Personal Consumption Expenditure (PCE) Price Index, the Fed’s favored indicator of inflation, is anticipated to thin to 4.7% in July from 4.8% per annual basis the month earlier, which is anticipated to have an impact on USD/JPY. Proof of relieving pressure on prices may restrain the recent power in the greenback as it inspires the FOMC to change its strategy to counter inflation.
To accomplish a smooth landing for the US economic system, the FOMC may incorporate relatively small rate increases over the upcoming months. It is unclear, however, if the advisory board will change the forward advice at the next exchange rate judgment on September 21, when the central bank is scheduled to keep updating the Summary of Economic Projections (SEP).
Since traders have been net-short the couple for most of the year, the USD/JPY might track the upward curve of the fifty-Day SMA (135.51) as it rises back just above the rolling average in the interim.
According to the IG Client Sentiment survey, 30.42 percent of investors are now net long USD/JPY, with a short-to-long trading ratio of 2.29 to 1.
In contrast, the net-short investors are 5.46% greater than yesterday and 24.31% greater than the previous week. The amount of traders who are net-long is 6.62% greater than yesterday and 0.57% lower than the previous week. While the increase in net-short interest has spurred the crowded behavior, the fall in net-long stance coincides with USD/JPY trading at a new month high (137.65). The week before, 31.52% of investors were net-long the pairing.
The exchange rate may try to challenge the annual high (139.39) as it settles the starting range for August, and the latest price behavior has increased the potential for another climb in USD/JPY as it continues the week’s trend of stronger peaks and valleys.