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▲ Dollar (USD), Japanese Yen (JPY)/AI Generated Image
With the dollar-yen exchange rate surpassing 162 yen, the possibility of breaking through the 164.22 yen resistance level has been raised. Analysis suggests that the interest rate gap between the US and Japan has reignited the yen's weakness.
According to FXLeaders, a foreign exchange specialized media outlet, on July 8 (local time), the dollar-yen exchange rate rose to 162.46 yen. The monetary policy of former Federal Reserve Chairman Kevin Warsh and the superior yields of US Treasury bonds supported the dollar's strength.
Warsh recently eliminated the central bank's forward guidance and abolished the summary of economic projections. US core consumer price inflation recorded 4.1%, while overall consumer price inflation was 3.8%. In the market, expectations for a September rate cut receded, and the possibility of an October rate hike began to be reflected.
The Bank of Japan (BOJ) raised its short-term policy rate by 25 basis points to 1% on June 16, the highest level since September 1995. However, analysis suggests that demand for yen-funded carry trades continued as US benchmark interest rates remained hundreds of basis points higher than Japan's.
Technical trends also supported the dollar's strength. The dollar-yen exchange rate is setting higher highs and lows above the 160.40 yen uptrend line. The 200-day moving average is 156.92 yen. The Relative Strength Index (RSI) recorded 67.53, and the Moving Average Convergence Divergence (MACD) showed a positive trend above the 0 line.
FXLeaders presented the defense of the 160.72 yen Fibonacci support zone as a key condition. The structural invalidation zone was identified below 158.89 yen. If the upward trend continues, the next price targets were suggested to be the Fibonacci 1.272 extension levels of 164.22 yen and 166.39 yen.
[Article Key Summary]
-The dollar-yen exchange rate rose to 162.46 yen, raising the possibility of breaking through the 164.22 yen resistance level.
-The sustained interest rate gap between the US and Japan fueled demand for yen-funded carry trades, supporting the dollar's strength.
-FXLeaders suggested 164.22 yen and 166.39 yen as the next price targets if 160.72 yen is defended.
*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*
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