Amid tensions surrounding the situation in the Middle East, USD/JPY has broken above its 200-day moving average and is testing higher levels. The focus will now be on developments in geopolitical risks and the release of the US September CPI.
Yesterday, USD/JPY rose approximately 0.2% on a closing-price basis. With trading subdued due to holidays in Japan and the United States, there was a period when safe-haven dollar buying took precedence against the backdrop of heightened tensions in the Middle East. The pair was also seen rising to around ¥158, and its break above the 200-day moving average was a key market development.
For today's outlook, the view was expressed that range-bound trading around the ¥158 level would continue unless new developments emerge, although heightened tensions in the Middle East could generate fresh moves. At the time of writing, USD/JPY was trading at around ¥158.56, and trading around the 200-day moving average is expected to continue.
Key events include the release of the IMF World Economic Outlook, speeches by US Federal Reserve officials and earnings announcements by US companies. USD/JPY's short-term direction is expected to be affected by these factors as well. With the release date for the US September Consumer Price Index (CPI) approaching, any change in the situation surrounding a Middle East conflict could spill over into the market.
The expected range for the popular currency pair USD/JPY today is ¥158.000–¥159.400, with trading around the 200-day moving average expected to be the central theme. The market is expected to remain focused on gauging the extent of any adjustment within the range while monitoring developments in the Middle East and the results of US economic data.