At the Jackson Hole meeting last weekend, Chairman Powell’s comments caused the dollar-yen to fall more than 2 yen, from the mid-148 level down to the mid-146 level. At the start of this week in the Tokyo market, the dollar recovered, and the pair rose back to around the mid-147 level, which is about half of the earlier drop. In the New York market, U.S. long-term interest rates also went up, and with broad dollar buying, the dollar-yen rose further to 147.93 at the close.
Although Powell’s comments were soft, he also showed concern about inflation, so the market may have overreacted. If inflation signs appear, more dollar buying could happen. However, since the FRB still has a stance of cutting rates, after this round of buying is finished, stronger dollar selling is expected again.
Expected Dollar-Yen Range: 147.20 – 148.20 yen
Note: This information does not guarantee profit. Please make your own decision when trading.