- The Japanese yen has dropped below 158 against the US dollar for the first time since May 1990.
- Short-term movements of the USD/JPY pair are closely watched, especially in response to upcoming economic data from both the US and Japan.
The JPY weakened below 158.200 against the dollar. It is the first time since May 1990 we have seen this exchange rate for the USD/JPY. The reason is possibly attributed to the Bank of Japan keeping interest rates unchanged last Friday.
With the USD/JPY comfortably above both the 50-day and 200-day EMAs, a break above 158.500 might propel it towards 160.000.
Market attention remains fixed on whether Japanese authorities will intervene in currency markets to stem the yen’s decline. Other than this, short-term USD/JPY movements may depend on this week’s US and Japanese economic data.
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In Japan, focus lies on April’s consumer confidence, unemployment rate, retail sales, and industrial production, along with insights from the BoJ’s meeting minutes. better-than-expected figures could boost demand for the Japanese yen.
However, most eyes will be on the US Fed’s upcoming decision this week, with expectations for maintaining record-level borrowing costs, potentially pushing the yen further down.
The Fed decision will be followed by the non-farm payrolls report, expected to show a rise of 210K jobs in April, though slower than March’s 303K. Better-than-expected figures here could affect investor outlooks on a September Fed rate adjustment, and giving the USD/JPY more reason to target the 160.000 level.
