USD/JPY opened the week at 157.30 after the yen snapped a five-session losing streak, helped by intervention warnings from Japan's finance minister. The rebound stays capped by a wide US-Japan rate gap and Federal Reserve tightening bets that firmed after hawkish Fed commentary last week.
USD/JPY opened the week at 157.30, with the yen pulling away from two-week lows and snapping a five-session losing streak heading into the new week.
Katayama cites Trump's concern over yen weakness
Finance Minister Satsuki Katayama said Donald Trump had expressed concern over the yen's weakness during a meeting with Prime Minister Sanae Takaichi earlier in the week. Markets are watching for currency intervention risk as USD/JPY nears the psychologically important 160 level, a mark that could test how far Tokyo will let the yen slide.
Katayama also confirmed she will keep coordinating with US Treasury Secretary Scott Bessent, following the joint intervention by Japan and the United States in late July, the first such action since 1998.
Fed rate bets keep the pressure on
Even so, pressure on the yen has not fully lifted. Expectations of further Federal Reserve rate hikes keep the interest rate differential between the US and Japan wide, while uncertainty over the pace of Bank of Japan tightening also limits the currency's room to strengthen.
That dollar-side pressure firmed after a run of hawkish Fed commentary. Markets now price 16 basis points of tightening for the Fed's Oct. 28 meeting, down from a 19-basis-point peak last week. According to ING FX strategist Francesco Pesole: "Data could re-emerge as a primary driver for the dollar this week." ING expects September payrolls at 90,000 on Friday, with risk of downward revisions to August's 162,000 print, while August PCE data is due Wednesday.
Technical picture stays corrective below 157.96
On the four-hour chart, USD/JPY broke the lower boundary of its upward channel around 157.96 after completing a growth wave to 159.00, with the structure still favoring a decline toward 156.51. A rebound from that level could return the pair to 157.96; a break above would open the way back toward 159.00 and 160.12. As long as price holds below 157.96, the near-term scenario remains corrective.
Sources: ActionForex, Investing.com
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