The yen is set to halt its slide against the dollar this week, with USD/JPY down 0.2%, as accelerating Japanese inflation lifts bets on a Bank of Japan rate hike. Technical guardrails between roughly 158.31 and 159.15 now frame the pair's next move.
Yen halts its post-intervention slide
The Japanese yen was set to halt a slide against the dollar following a historic joint intervention by authorities in Washington and Tokyo at the end of July. USD/JPY was down 0.2% for the week, even as the broader dollar headed for its worst weekly performance since the end of July.
Support for the yen came from data showing Japan's core consumer inflation accelerated to 1.8% in July, alongside robust private-sector purchasing managers' index readings. That combination is bolstering expectations for a Bank of Japan rate hike in September.
Dollar pressured by fiscal concerns
Currency traders have been focused on the fixed-income space this week, after longer-term Treasury bonds sold off since the Federal Reserve's July rate decision. On Wednesday, the U.S. Treasury said it would increase repurchases of long-dated government debt to at least $4 billion from $2 billion, a move that briefly rallied bonds before much of the advance was wiped out.
The U.S. dollar index was down 0.1% to 98.80, near a three-month low and headed for a weekly loss of 0.9%. Fiscal worries also grew after news that U.S. debt had crossed $40 trillion.
Technical guardrails frame next week's range
On the hourly chart, USD/JPY's low for the day stalled at 158.35, just above the 200-day moving average at 158.313, before buyers pushed the pair back higher. That average now marks the lower guardrail heading into next week.
The rebound pushed the pair back toward the 100-hour moving average at 159.04 and the 200-hour moving average at 159.154, which together form the upper guardrail. A break below 158.313 would open the door to 157.979 and then 157.25, while a move above 159.154 would put 159.60 and then the 159.98–160.00 area in view.
Sources: Investing.com, InvestingLive
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