Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Daily brief: Japanese yen under pressure as USD/JPY climbs after Jackson Hole

Japanese yen sinks as US dollar gains over the past 24 hours; dovish Bank of Japan a hindrance to JPY after Jackson Hole and Nikkei 225 pulling back ahead of this week’s US jobs report.

Source: Bloomberg

Monday’s market recap – Japanese yen sinks as US dollar gains

The Japanese yen was the worst performing G10 currency against the US dollar on Monday, mostly building on fundamental themes that weakened it last week. It was a quiet 24 hours given a lack of prominent economic event risk. This allowed traders to digest and continue repositioning themselves in the wake of the annual Jackson Hole Economic Symposium.

On Friday, Federal Reserve Chair Jerome Powell continued to double down on the message of fighting the highest inflation in 40 years. He also told the world that there might be some economic pain involved in doing so. As a result, the markets boosted hawkish policy expectations, continuing to eat away at pivot forecasts for 2023.

This brings us back to the Japanese yen. At this point, the Bank of Japan is the lone standout amongst its G10 counterparts as a dove. Given that markets focused last week on a more hawkish Fed, this left JPY vulnerable. Moreover, Asia-Pacific markets were offline during Jackson Hole. Most of USD/JPY’s rise on Monday occurred during the APAC trading session as regional investors likely caught up with the news.

USD/JPY technical analysis – daily chart

USD/JPY closed at its highest since the middle of July on Monday, taking out the 137.65 resistance point. That has brought it within inches of the current 2022 high of 139.391. This point stands as key resistance. Taking it out would open the door to resuming the dominant uptrend towards the 78.6% Fibonacci extension at 140.63. Otherwise, key support appears to be at the 38.2% level at 135.37.

Source: TradingView

Tuesday’s Asia-Pacific trading session

Much like Monday, Tuesday has little key economic event risk coming for the Asia-Pacific trading session. This would likely place traders focusing on general risk appetite and perhaps positioning themselves ahead of Friday’s US jobs report. More signs of a tight labor market could underpin hawkish Fed policy bets, placing the US dollar in a favorable position. That may also note bode well for sentiment, leaving the Nikkei 224 at risk.

Nikkei 225 technical analysis – daily chart

On the daily chart, Nikkei 225 futures have pulled back about 4.1% from the August 17th high (29230). Prices confirmed a breakout under the 20-day Simple Moving Average (SMA). But, a Long-Legged Doji candlestick pattern was left behind. This is a sign of indecision as prices retest the former falling trendline from September 2021. As such, key support seems to be immediately below. This may offer an opportunity to bounce back. Otherwise, further losses could open the door to extending the drop. Such an outcome places the focus on the 61.8% Fibonacci retracement level at 26940.

Source: TradingView

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. See full non-independent research disclaimer and quarterly summary.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa 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. See full non-independent research disclaimer and quarterly summary.

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

Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

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.