Japan's Finance Minister boosts Yen with strong statements

Japanese Yen gains against US Dollar for second straight session

17 November 2023

  • USD/JPY dropped by more than 1.50% over the span of two trading sessions

  • Japanese authorities have issued statements to bolster the yen and mitigate its pronounced weakness.

  • Yields on ten-year US Treasury bonds have seen a reduction.

In the realm of currency dynamics, recent economic events have orchestrated notable shifts in the trajectories of both the US dollar and the Japanese yen. Here's a breakdown:

The Japanese yen has exhibited a substantial surge against major currencies, extending its upward momentum into a second consecutive session versus the US dollar.

This surge can be attributed to verbal interventions by Japanese authorities, strategically aimed at shoring up the local currency and counteracting its pronounced weakness. Earlier this week, the yen hit its lowest point in a year, nearing levels not seen since 1990, hovering around 152 Japanese yen.

Japanese Finance Minister Taro Aso has asserted his vigilant monitoring of currency movements in the forex market, pledging to undertake all necessary measures to address any ensuing currency fluctuations. Meanwhile, Deputy Finance Minister Ryoshi Akazawa has disclosed plans for government intervention in the foreign exchange market to temper excessive volatility.

Conversely, yields on ten-year US Treasury bonds have witnessed a marked decrease, attributed to the easing of inflationary pressures, as evidenced by October's consumer and producer price data in the United States.

In the trading arena, the US dollar commenced the final session of the week with a conspicuous decline against the Japanese yen. The USD/JPY pair recorded a dip of approximately 0.96%, nearing levels around 149.66 Japanese yen.

USDJPY technical analysis

Having peaked at 151.90, marking the upper resistance of an ascending channel pattern and representing the pair's highest level since 1990, the USD/JPY pair underwent a substantial decline and currently hovers around 149.44. Expectations suggest the pair might maintain the 149.00 level, potentially triggering a rebound and a challenge of the resistance at 150.40. A successful breach above this level could pave the way for further upward momentum towards 151.40.

However, a breach below the support level of 149.00 might usher in further declines towards the 148.20 support level.