USD/JPY is testing the 158 range in the New York market, with comments following the FOMC supporting the dollar on concerns that US inflationary pressure will persist and expectations of further rate hikes by the Federal Reserve. At the same time, caution over further upside is spreading.
USD/JPY is testing the 158 range in this morning’s New York foreign exchange market. Against the backdrop of comments by FOMC members following last week’s meeting, concerns that inflationary pressure will persist have mounted, while expectations of further rate hikes by the Federal Reserve are supporting the dollar. At the same time, the 200-day moving average is positioned in the mid-158 range, prompting growing caution over a move toward the ¥160 level.
As the market searches for clues on Federal Reserve monetary policy, attention is focused on a speech by Fed Governor Barr. The previous day, Richmond Fed President Barkin had said that bringing inflation under control could take time. Higher oil prices while the United States is a net energy exporter, along with uncertainty over risk sentiment, are also viewed as short-term factors supporting the dollar.
After the Bank of Japan decided to raise interest rates late last week, USD/JPY has approached the level where the Bank of Japan is said to have conducted a rate check. Japan is currently nearing the end of a series of public holidays, and with market liquidity thin, some market participants believe price movements could be amplified if intervention risks in Japan and the United States increase. Intervention risk itself is increasingly being priced in, while the unwinding of yen short positions is also progressing.
The expiry of options at the 11 p.m. New York cut is estimated to be near ¥157, with levels such as ¥157.00 and ¥157.50 indicated.