What number to bet on? 160 or 140?
USD/JPY reached a new 24-year high, almost touching the 150 level.
The Yen started its sharp decline against the dollar since February. According to the published economic data, major central banks' policies, and the intervention of the Japanese Ministry of Finance, in the long term may not goes as it is right now. Therefore, even if it looks hard and challenging, return is a serious option.
On the other hand, the US dollar also still increasing, but economic data in the US show some signs of weakness, which can affect the USD value as well. Last week's US inflation data shows the third consecutive month of decline, which means that if the economic slow continues, we can expect the less tightening policies from the Fed and a slower pace or even a pause in its rate hike path.
Last week on Tuesday, a Japanese government representative stated that they will continue to monitor the FX market closely and take appropriate responses against excessive moves, which means more intervention, especially after last month's intervention of the Ministry of Finance, which was the first since 1998.
On the other hand, BOJ likely reverse its dovish policy to aid the struggling Yen. In its latest monetary policy meeting, the BOJ maintained its ultra-easy monetary policy by holding its main interest rate at -0.10%. Japan also continues to pour money into the economy for now, however, while other countries are adopting a tighter fiscal policy, holding this trend can increase the spread between the BoJ and other major central banks, therefore, the Japanese central bank will need some adjustment with the global economy. The difference in interest rates with other major Central Banks puts more pressure on the Yen, driving its price down.
From the technical point of view, USD/JPY moves in a clear uptrend and the 1990 high near 160 can be the next target. On the flip side, if the USD/JPY falls, support might be found near 143.5 and further down at 141.5.
