USD/JPY is expected to continue testing lower levels in the New York market, with the pair potentially becoming active again depending on the U.S. durable goods orders data. Attention should also be paid to efforts to curb yen depreciation.
The prevailing view in the foreign exchange market is that USD/JPY will continue moving lower. Near levels marking a supply-demand inflection point, the market is expected to prioritize establishing a base rather than a short-term rebound. Market participants will closely monitor developments during overseas trading hours and prepare for a renewed downside risk.
The focus is expected to shift to the U.S. durable goods orders data. Depending on the results, the data could readily affect the direction of long-term U.S. interest rates, potentially causing USD/JPY's trading range to widen temporarily. The market is expected to become more sensitive to the release time and its reaction.
At the same time, efforts to curb yen depreciation will also draw attention. There may be situations in which reports emerge of efforts aimed at stabilizing the yen, including comments by government and Bank of Japan officials, the possibility of intervention, and whether measures to curb yen appreciation are introduced. Caution is also warranted over periods when catalysts become scarce from both real-demand and speculative perspectives.
Overall, the market could experience short-term volatility depending on the U.S. durable goods results and efforts to curb yen depreciation. Investors should monitor the schedule for the release of U.S. data and comments from key officials while preparing for sharp moves.