The Japanese Yen has been more stable than most in the face of a broadly stronger Dollar, with the prospect of tighter BoJ policy underpinning it
However, the Japanese currency enjoys some underlying support from market suspicions that the Bank of Japan could tighten its own ultra-looseJapanese workers’ real wages fell for the 21st straight month in December, according to official data released on Tuesday.
However, they did so at a slower pace than that seen in November. Annual wage negotiations are now under way in Japan and their outcome could be the single biggest pointer to what the BoJ is likely to do this year. While the thesis that rates could yet rise, the Yen will likely continue to enjoy some support, even though it will continue to offer comparatively meager yields for a long time to come.The currency also benefits from a degree of haven demand, as Japanese investors tend to repatriate offshore investment cash in times of geopolitical stress. Sadly, you don’t have to look too far for that right now which is probably one more reason why USD/JPY didn’t break its established trading range during last week-s Dollar surge. USD/JPY is looking at a quiet couple of days for trading cues, with Thursday’s economy watchers’ survey out off Japan the next data release to watch. While it might move the Yen in a quiet session, it’s unlikely to present more than short-term trading opportunity.The Dollar has bounced at both the top and bottom of its prior trading range in the last four days, confirming that the range retains relevance despite being derived from levels last seen in late November last year. A break is likely to be key for near-term direction at least, with the range top providing resistance at 148.69 and its base offering support at 146.60. The latter level is also the first Fibonacci retracement of the long rise to last November’s significant highs from the lows of March. The market is clearly in no mood to spend a lot of time below that level for the moment, but steeper falls could be seen if it does. The next retracement level is at 143.43, a support level which hasn’t been seen since early January.Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Forex trading involves risk. Losses can exceed deposits. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Information presented by DailyFX Limited should be construed as market commentary, merely observing economical, political and market conditions. This information is made available for informational purposes only. It is not a solicitation or a recommendation to trade derivatives contracts or securities and should not be construed or interpreted as financial advice. Any examples given are provided for illustrative purposes only and no representation is being made that any person will, or is likely to, achieve profits or losses similar to those examples. DailyFX Limited is not responsible for any trading decisions taken by persons not intended to view this material.
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