USD/JPY is expected to remain firm. Continued attention will be needed on yen-cross movements, against a backdrop of higher crude oil prices due to the situation in the Middle East and the outlook for US interest rates.
In the New York market on the 12th, USD/JPY rose from ¥158.57 to ¥158.75. The move was attributed to dollar buying prompted by higher crude oil prices linked to the possibility of an attack on Riyadh airport, the capital of Saudi Arabia, and expectations of higher US interest rates.
Looking ahead from today, USD/JPY is expected to remain firm, with views that the dollar will continue to be supported by concerns about US inflationary pressure and higher interest rates resulting from higher crude oil prices. In the short term, the focus will be on whether the pair can clearly break above the 200-day moving average. Some market participants say that, if this is achieved, further upside would become easier to pursue.
At the same time, ¥160, regarded as Japan's defense line, is being watched, and situations in which concerns about currency intervention increase are also anticipated. The market is said to be preparing for USD/JPY to test the lower half of the ¥152 range, so attention is also needed on downside risks.
In Europe, concerns about deteriorating fiscal conditions increased, and EUR/USD fell to a new low since May last year. This could also affect yen-cross movements, which will bear watching.