In yesterday’s market, dollar/yen rose as high as ¥158.55 and traded near its highs. With dollar buying and yen selling against the backdrop of the Japan-U.S. interest-rate differential continuing, aggressive moves aimed at breaking above ¥159 are expected to be restrained.
In yesterday’s market, dollar/yen traded in the upper ¥158 range, rising as high as ¥158.55. Trading continued near its highs thereafter, with the trend of a stronger dollar and weaker yen remaining intact. Yen selling also spread as risk appetite paused, amid moves focused on the Japan-U.S. interest-rate differential and signs of renewed buying in IT and technology stocks in the U.S. market.
Looking ahead, dollar/yen is expected to remain firm, but aggressive buying aimed at breaking above ¥159 is likely to be restrained as Japan and the U.S. remain mindful of measures to discourage yen depreciation. The euro is expected to remain around US$1.1200 and the pound in the US$1.3250–1.3400 range.
Euro/yen is trading firmly in the upper ¥177 range, supported by the strength of dollar/yen. Pound/yen rose at one point to around ¥211, but buying is expected to remain limited amid caution over high levels.
Attention will focus on developments in the U.S. market and Japan-U.S. foreign-exchange intervention, and dollar/yen may face limited upside, according to the outlook.
Other currency pairs, including euro/yen and pound/yen, are also expected to develop with market participants carefully assessing direction while being affected by concerns over the situation in France and interest-rate expectations.