USDJPY heads for 25-year high
A rise in Treasury yields and strong US jobs data on Friday boosted the dollar, which rose against the basket of major currencies.
The yen fell to a new 24-year low after Japan’s ruling coalition widened its majority in Sunday’s upper house elections. Investors interpreted the result as a next wave of super accommodative monetary policy.
USDJPY gained 0.9%, breaking through the closely watched 137 level. Bank of Japan Governor Haruhiko Kuroda said on Monday he would not hesitate to add monetary stimulus if needed to boost the troubled economy.
However, the election result reflects public support for Prime Minister Fumio Kishida, who adheres to an accommodative monetary policy and makes it clear that rising inflation in Japan is not as critical for the local population as it is abroad. foreign.
With the BOJ keeping interest rates low even as foreign rates climb, the yen has fallen more than 16% against the greenback this year. According to data compiled by Bloomberg, the currency is only a hair’s breadth away from its worst decline ever.
What about the dollar?
The US dollar could remain expensive until risks related to high global inflation, European energy security and China’s growth outlook are resolved. Additionally, the break of the 107.50 resistance level opens the way to 110.50 for the US Dollar Index, a gain of 2.8%. An upcoming 50 basis point rate hike by the Federal Reserve in July makes it almost inevitable.
USDJPY daily chart
Currently, buyers are attacking the resistance at 137.50, the 261.8 Fibonacci level. The breakout of this zone opens the way to 144.00, the highest ratio since 1998.