USD/JPY Price Forecast: Holds breakout above 162.00
- USD/JPY rises to near 161.25 as the US Dollar outperforms its peers.
- The Fed is almost certain to deliver at least one interest rate hike this year.
- Japan’s Katayama said that her government will respond appropriately to currency moves.
The USD/JPY pair trades 0.16% higher to near 161.25 during the European trading session on Tuesday, the lowest level seen in over four decades. The pair trades firmly as the US Dollar (USD) outperforms ahead of the United States (US) Nonfarm Payrolls (NFP) data for June, which will be released on Thursday.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.2% higher to near 101.36.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.20% | 0.19% | 0.16% | 0.19% | 0.02% | 0.27% | |
| EUR | -0.27% | -0.07% | -0.11% | -0.16% | -0.09% | -0.27% | -0.02% | |
| GBP | -0.20% | 0.07% | -0.02% | -0.08% | -0.01% | -0.19% | 0.05% | |
| JPY | -0.19% | 0.11% | 0.02% | -0.03% | -0.01% | -0.15% | 0.07% | |
| CAD | -0.16% | 0.16% | 0.08% | 0.03% | 0.02% | -0.12% | 0.11% | |
| AUD | -0.19% | 0.09% | 0.01% | 0.00% | -0.02% | -0.14% | 0.09% | |
| NZD | -0.02% | 0.27% | 0.19% | 0.15% | 0.12% | 0.14% | 0.22% | |
| CHF | -0.27% | 0.02% | -0.05% | -0.07% | -0.11% | -0.09% | -0.22% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Investors will pay close attention to the US official employment data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
Currently, the CME FedWatch tool shows that traders see an almost 80% chance that the central bank will deliver at least one interest rate hike this year.
On the Tokyo front, Japan officials have warned of intervention to support the Japanese Yen (JPY). Earlier in the day, Japan’s Finance Minister (FM) Satsuki Katayama said that her government “will respond appropriately to currency moves at any time as needed”. However, Katayama declined to comment on specific FX levels.
USD/JPY technical analysis
USD/JPY trades higher at around 162.25. The pair holds a bullish near-term bias as it extends above the 10-week exponential moving average (EMA) at 160.32, keeping the broader uptrend intact.
The Relative Strength Index (RSI) at 65.72 stays in positive territory but shy of overbought, suggesting persistent upside pressure with only moderate risk of a momentum correction.
On the downside, immediate support emerges at the June 223 high at 161.93, followed by the 10-week EMA near 160.32. Looking up, the apir could extend its advance towards 163.00 and 164.00.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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