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USD/JPY holds above 158 as Fed-hike talk boosts the dollar
Japan’s Finance Ministry bought ¥15.4 trillion of yen from July 30 to August 26, but USD/JPY is still set for its first daily close above the 200-day average since September 2.
USD/JPY is trading above 158.00 and is on track for its first daily close above its 200-day average since September 2, according to FXStreet. The yen’s rebound has been fading as investors weigh renewed discussion of further US Federal Reserve rate hikes.
FXStreet notes that Japan has spent more to support the currency, with Japan’s Finance Ministry purchasing ¥15.4 trillion of yen between July 30 and August 26, compared with ¥11.7 trillion in April and May. The US Treasury also joined in on July 31, and the most Japan has ever spent in a month kept USD/JPY below 160.00 for four weeks.
The move comes after the Bank of Japan raised its policy rate to 1.25% on September 18 in a 7-2 vote, with the new rate applying from Thursday, FXStreet said. With the Fed at 3.75% to 4.00% and Fed Governor Barr arguing for more increases, the report says borrowing yen at 1.25% to buy dollars yielding close to 4% remains supportive for USD/JPY.
FXStreet adds that Japan’s markets are closed for national holidays until Thursday, when the new BoJ rate starts, and that officials checked exchange rates with dealers on September 18, typically a step before Japan buys yen. The report also highlights 158.00 as a key near-term level, with resistance around 158.50 to 160.00 and support around 157.50 to 157.00, based on the 200-day EMA and prior price action.
Latest closeUSD/JPY 158.21 ▲0.5%