The dollar accelerated its rally against the Japanese yen on Friday to hit session highs at 148.85. The pair has surged beyond 3% in an eight-day rally, reaching its highest levels since 1990.
The Japanese yen is dropping like a stone weighed by the monetary policy divergence between the Bank of Japan and the Federal Reserve, and also the rest of the world’s major central banks.
While the Fed is expected to hike interest rates by 0.75% for the fourth consecutive time in November, the Bank of Japan remains committed to its ultra-expansive policy, which makes the yen less attractive for investors.
At this point, the pair has appreciated well above the level that triggered intervention by the Bank of Japan last month. So far the bank has remained inactive, however, the Japanese finance minister Suzuki reiterated on Thursday the government’s commitment to take action against excessive currency volatility.
According to FX analysts at Credit Suisse, the pair might be near a potential top: “Our bias remains for a deeper push higher into the 147.62/153.01 zone with resistance above 147.62/68 seen next at 148.42 ahead of trend resistance from April at 149.17. With rare gap resistance from August 1990 seen at 149.31 and the psychological 150.00 barrier just above, we look for a potential top in this 149.17/150.00 zone.”
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