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, 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, 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:

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

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
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.