USD/JPY pushed beyond 162 as a firmer dollar drew safe-haven demand, climbing toward its early July 40-year high at ¥162.84 and stirring speculation about Japanese intervention. Renewed Middle East tensions lifted oil and Treasury yields, reinforcing the move.
The dollar advanced to a one-week high and pushed USD/JPY beyond 162, lifting the pair toward levels last seen four decades ago. The climb increased speculation that Japanese authorities may respond with currency intervention.
The pair climbs toward a 40-year high
USD/JPY continues to rise from last week's ¥160.48 low toward its early July 40-year high at ¥162.84. If that peak is bettered, the November 1986 high at ¥165.00 will likely be next in line, according to IG's technical analysis.
Minor support sits around the 18-to-25 June highs at ¥161.95-to-¥161.81 and may be found along the May-to-July uptrend line at ¥160.92. While last week's low and the late April high at ¥160.72-to-¥160.48 hold, the medium-term uptrend remains intact.
Safe-haven demand and inflation fears drive the dollar
The dollar's advance came alongside renewed selling in risk assets. Brent crude rose more than 3% to $76.54 a barrel after renewed US airstrikes on Iran and the reimposition of sanctions on Iranian crude exports fuelled concerns that the fragile ceasefire could unravel.
Higher oil prices reinforced fears of persistent inflation. US 10-year Treasury yields climbed around three basis points to a one-month high of 4.565%, while 30-year yields moved above 5%. Markets increased the probability of a September rate hike to above 63% ahead of the Federal Reserve's latest meeting minutes.
USD/JPY outlook stays bullish above ¥160.48
The pair's short-term outlook stays bullish while it holds above the 3 July low at ¥160.48. The medium-term view remains bullish while price trades above the 3 June low at ¥159.37. A sustained break of the early July 40-year high at ¥162.84 would put the four-decade barrier directly in play.
Source: IG
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