Yesterday in the Tokyo market, the Nikkei stock index rose sharply, which led to yen selling (risk-on sentiment) and dollar buying due to rising U.S. interest rates. As a result, USD/JPY rose to the lower 150 yen range.
However, during the New York session, South Korea declared emergency martial law, triggering a risk-off movement. This caused USD/JPY to drop to 148.65 yen. Later, the U.S. October JOLTS report came out stronger than expected, which supported dollar buying, but the price gains were limited.
Following reports that South Korea would lift martial law, yen selling resumed, and USD/JPY recovered to around the mid-149 yen range. While the immediate chaos was avoided, the situation in South Korea remains unstable, and the risk of tensions with North Korea has increased, keeping geopolitical concerns high.
On the other hand, strong U.S. employment data is reducing expectations for a Federal Reserve rate cut, which is supporting USD/JPY.
Today, the ADP employment report and ISM Non-Manufacturing Index will be released. If these reports are strong, like the previous day’s JOLTS report and Monday’s ISM Manufacturing Index, USD/JPY may test higher levels. However, risk-off movements and anticipation of Friday’s U.S. employment data could limit any upward movement and lead to a pullback.
USD/JPY Expected Range: 150.20 yen to 148.60 yen
Note: The above content does not guarantee profits. Please make your own decisions when trading.