USD/JPY, contained above 113.00, bounces up to 113.50 area
13.10.2021, 16:13

USD/JPY, contained above 113.00, bounces up to 113.50 area

  • The dollar remains near three-year highs at 113.80, supported above 113.00. 
  • The Japanese yen edges up after a four-day downtrend.
  • USD/JPY's rally is heading to 120.00 – ING.

The US dollar is regaining some ground against the Japanese yen on Wednesday’s US trading session. The pair’s reversal from three-year highs at 113.80 has found support at 113.25, before ticking up to 113.45.

The yen edges up against a softer US dollar

The Japanese yen appreciated earlier on Wednesday, supported by a somewhat weaker dollar, on the back of a flattening US yield curve. The 10-year bond yield has dropped to 1.57% after having peaked at 1.61 on Tuesday, while the 2-year yield has surged to 18-month highs at 0.36%

Furthermore, the US macroeconomic calendar has confirmed the inflationary pressures threatening economic recovery. US consumer prices accelerated at a 0.4% monthly pace and 5.4% year-on-year in September, from 0.3% and 5.3% respectively in September.

These figures bring into question Fed Powell’s theory of a “transitory” high inflation and bolster expectations the Federal Reserve may announce the rolling back of its massive monetary stimulus program in November.

USD/JPY: Seen rallying towards 120.00 – ING

According to the FX Analysis team at ING, however, USD’s rally is far from being finished. They expect the pair to reach prices at 120.00:  “Pressure is building for a topside break out in USD/JPY. We think the US macro/Fed story will be a positive one for the dollar over the next 15 months (USD/JPY to trade to 120), while home-grown developments look slightly JPY bearish.”

Technical levels to watch

 

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