- The yen has lost around 30% of its value against the dollar since 2020.
- US Treasury yields and the dollar have risen since Trump won.
- US consumer inflation rose as expected in October.
The USD/JPY outlook shows sharp declines in the yen as the dollar scales new peaks due to optimism about Trump’s election win. Meanwhile, top officials in Japan are getting concerned about a weak yen, with some urging the BoJ to hike rates.
–Are you interested to learn more about low spread forex brokers? Check our detailed guide-
According to data from the Bank of Japan, the yen has lost around 30% of its value against the dollar since 2020. This decline has come from low interest rates in Japan, which has created a wide rate differential with the US. However, the BoJ recently shifted to rate hikes before pausing amid concerns about market volatility.
Meanwhile, US Treasury yields and the dollar have risen since Trump won the election. At the same time, Fed rate cut expectations have dropped. Therefore, the hope of quickly shrinking the rate gap is fading.
On Thursday, a top opposition leader said that the Bank of Japan should raise rates to 1% to support the weak yen. Moreover, he added that the central bank should be vocal about its plans.
Meanwhile, data on Wednesday revealed that US consumer inflation rose as expected in October. On a monthly basis, it increased by 0.2%, while annually, it rose by 2.6%. Therefore, the Fed will likely lower borrowing costs by 25-bps in December.
However, the outlook for rate cuts in 2025 has changed with Trump as the new president. His policies on taxes and trade will likely be inflationary. Therefore, the Fed might have to pause or cut rates more slowly than expected.
Elsewhere, the US will release wholesale inflation and retail sales figures, which will continue to shape bets on a December Fed rate cut. Moreover, market participants will pay attention to Powell’s speech.
USD/JPY key events today
- US core PPI m/m
- US PPI m/m
- US unemployment claims
- Fed Chair Powell speaks
USD/JPY technical outlook: Uptrend continues above 156.02
On the technical side, the USD/JPY price has reached a new peak near the 156.02 key level. The price trades well above the 30-SMA, indicating a strong bullish move. Moreover, bullish momentum is strong, with the RSI in the overbought region.
–Are you interested in learning more about AI trading brokers? Check our detailed guide-
Initially, the price had struggled to breach the 154.00 resistance level. However, when it did, bulls confirmed a continuation of the previous bullish trend.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
