Last weekend in the Tokyo market, the USD/JPY pair had risen to the 158-yen range, leading to selling by actual market participants.
Early in the morning, Tokyo’s Consumer Price Index (CPI) was announced, showing an increase for the second month in a row, which limited the dollar-yen pair’s upward movement. However, the Bank of Japan (BOJ) released a summary of opinions that followed Governor Ueda’s previous comments. These opinions did not raise the likelihood of a January interest rate hike, allowing the dollar-yen to recover.
Later, Finance Minister Kato made remarks to discourage yen weakening, briefly pushing the pair down to the mid-157-yen range. However, this drop was only temporary.
In the end, the pair rose again in the U.S. and European markets. Although falling U.S. stock prices pushed the pair down to 157.36 yen, rising U.S. long-term interest rates brought it back up to 157.94 yen by the close.
Despite factors supporting yen buying, the USD/JPY pair remains strong and stable.
As the Tokyo market takes a break for the year-end and New Year holidays, the yen may become a target for selling. With less likelihood of intervention during this time, the dollar-yen pair is expected to test higher levels. However, due to low market activity, if buying interest fades, the pair could fall sharply. The widening Bollinger Band suggests larger price movements are likely.
Today’s USD/JPY Forecast Range: 158.10–157.30 yen
This Week’s USD/JPY Forecast Range: 160.00–154.50 yen
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