USD/JPY price climbs above 151.60 on Bank of Japan rate hike hints
The yen continued to recover against the dollar on Monday.
On November 4, the Japanese yen continued its upward trend against the U.S. dollar, driven by weak U.S. labor market data and hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda.
At the time of writing, the USD/JPY pair was trading above 151.60, with the dollar down about 1% since the start of the trading day.
The yen continued to recover against the dollar on Monday
Last Friday, Japan’s Chief Cabinet Secretary Yoshimasa Hayashi expressed hope that the BoJ would work closely with the government to implement monetary policy aimed at achieving the inflation target in a sustainable and stable way. However, BoJ Governor Kazuo Ueda stated that "the current political situation in Japan will not prevent him from raising rates if prices and the economy align with the Bank of Japan’s forecast."
He also noted that exchange rates are now more likely to impact prices in Japan than before.
“His statements were more hawkish than expected and are likely paving the way for a BoJ rate hike in December,” stated OCBC currency market analysts Francis Chung and Christopher Wong.
The dollar showed signs of weakness
Meanwhile, ahead of the Federal Reserve's expected 25-basis-point rate cut in November, the U.S. dollar depreciated due to weaker-than-expected Nonfarm Payrolls data.
After revising September’s data, U.S. nonfarm employment rose by 12,000 in October, significantly below market expectations of 113,000. Meanwhile, the October unemployment rate remained stable at 4.1%, matching consensus forecasts.
Annualized U.S. GDP growth in the third quarter was 2.8%, below the 3% quarterly growth seen in April-June and the same forecast for July-September.
Technically, the USD/JPY pair is currently trading below the upper boundary of its upward channel, indicating a potential weakening of the bullish bias. Although the 14-day Relative Strength Index (RSI) remains above 50, showing the presence of bullish momentum.
If the pair can reach the 152.90 level, the dollar may aim for the recent high at 153.88 before testing the upper channel boundary around 158.90.
On the other hand, immediate support for the USD/JPY pair is the 14-day Exponential Moving Average (EMA) at 151.60, with additional support around the psychological level of 150.00.
As previously reported, the yen fell to a three-month low, trading above 153, as the results of Sunday’s parliamentary elections are unlikely to contribute to political stability or strengthen the national currency.
