USD/JPY climbs to two-month high amid hopes of recovery
The US dollar spiked up higher for the fourth straight day against the Japanese yen, as investors remain buoyed by the reopening of economies.
The US dollar rallied for the fourth consecutive day against the Japanese yen.
The fiat currency climbed nearly 1.5% since the start of the week, and is trading at a two-month high of ¥109.088 as at 04:30 ET on Thursday 04 June.
USD/JPY ‘driven by interest to let go of safe haven yen’
This latest rally has taken place amid growing anticipation regarding the reopening of the US and other major economies, says IG Asia analyst Pan Jingyi.
‘With USD/JPY (大口）, prices had continued on a tear, driven primarily by the market interest to let go of the safe haven yen amid the improvement in risk sentiment,’ Pan explains.
‘The theme of reopening optimism continues to reign strong into this week within the FX market. Momentum trading also underpins the rally for the currency pair.’
In the near-term, Pan foresees a broad resistance zone of between ¥109.600 and ¥110.000 – prices last seen in late 2019 and early 2020.
Gain access to USD/JPY (大口）, AUD/USD and hundreds of forex pairs via IG's world-leading trading and investments platform. With CFDs (read about CFDs here), you can buy long or sell short on forex, equities, indices and more depending on whether you think prices will rise or fall. Start today by opening a live or demo IG account.
Similarly, the ongoing optimism had also driven US equity markets to close higher between Monday and Wednesday, with the three main stock benchmarks S&P 500, Dow Jones Industrial Average and Nasdaq 30 finishing Wednesday up 1.36%, 2.05% and 0.78%.
This upward trend is also despite current civil unrest within both the US and China (Hong Kong) in response to recent social and political issues, which appear to have minimal impact on investor sentiment for now.
USD tends to decline against the yen during uncertainty
As evident throughout the Covid-19 pandemic, whenever there was uncertainty and volatility in the markets, the greenback tended to decline against the yen, with investors preferring to accumulate the yen.
In February this year – when the virus first started to spread within the US, and uncertainty and panic were high, the USD had plummeted nearly 10% across a two-week period to a two-year low of under ¥105.000.
On the flipside, when the coronavirus death rates reportedly began to show signs of slowing down globally in April, the USD then rallied back above ¥109.000 – a level not seen until this latest rally.
How to trade USD/JPY with IG
Learning how to trade any market can seem daunting, so we’ve broken forex trading down into some simple steps to help you get started:
- Decide how you’d like to trade forex
- Learn how the forex market works
- Open an IG account
- Build a trading plan
- Choose your forex trading platform
- Open, monitor and close your first position
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
