USD/JPY – Testing 1.5-Year High

#OPINIONLEADER# #Signal#

 SEP 30, 2021

• U.S. Treasury yields at three-month high
• Market expecting tapering announcement from Fed in November

Chart 1: USD/JPY D1 chart

The hawkish tone sent out by the Federal Reserve during their meeting last week led to the Treasury yields rising to a three-month high of 1.5253% on Tuesday. The market is now expecting a quantitative easing (QE) tapering announcement to be made in the November meeting. Furthermore, the Fed’s quarterly dot plot indicated more members are projecting a rate hike earlier than in the previous forecast. As a result of the strong rise in yields, the U.S. dollar strengthened.

USD/JPY is currently trading at a 1.5-year high level around the 112 handle. For the past 2.5 years, there had been attempts to break above the level but to no avail. Hence, the 112 handle is proving to be a strong resistance for USD/JPY. Nonetheless, if USD/JPY manages to breach above this handle, the bull run may continue, presenting buying opportunities.

Trade Setup for USD/JPY (D1)

Buy Stop at 112.50

Upcoming major news that may impact price movement of USD/JPY

30 September – U.S. Final GDP q/q data release at 2030 (GMT+8)

30 September – Fed Chairman Powell testifying at 2200 (GMT+8)

30 September – Fed committee member Williams speaking at 2200 (GMT+8)

30 September – Fed committee member Bostic speaking at 2300 (GMT+8)

01 October – Fed committee member Evans speaking at 0030 (GMT+8)

01 October – U.S. PCE Price Index m/m data release at 2030 (GMT+8)

01 October – U.S. ISM Manufacturing PMI data release at 2200 (GMT+8)

05 October – Bank of Japan Governor Kuroda speaking at a tentative timing

05 October – U.S. ISM Services PMI data release at 2200 (GMT+8)

08 October – U.S. Nonfarm Payroll data release at 2030 (GMT+8)