"From my perspective, this decline is not merely a short-term move but a reflection of deeper shifts in global monetary sentiment-specifically the narrowing gap between the two countries' policies, which has already begun translating into accumulated selling pressure on the pair. Market behaviour during Thursday's session is clear: the entry of new sellers reflects a lack of confidence in the dollar's ability to maintain its momentum, especially after failing to capitalize on the modest rebound from 155.65, the lowest level in a week."
"With spot prices approaching 155.90 again, I believe the bearish momentum remains dominant, and that any attempts to recover are limited, as the market now views every rally as a selling opportunity rather than a signal of reversal. Such behaviour typically emerges when traders become convinced that the broader trend has changed or is undergoing a substantial repricing phase. A key driver of this pressure is the yen itself, which has begun regaining some strength supported by expectations of official intervention"
"As an economist, I see that the market is not waiting for intervention in and of itself, but is reacting to the "signal" of preparedness to act, combined with the fact that the Bank of Japan has become increasingly explicit in preparing participants for a potential rate hike next month, according to Reuters. These developments make the yen more attractive in the short term because they narrow the long-standing gap between Japan's ultra-loose monetary policy and that of other major central banks."
The USD/JPY pair declined to around 155.90, holding near a new weekly low amid competing Federal Reserve and Bank of Japan signals. The narrowing gap between US and Japanese monetary policies has generated accumulated selling pressure, as traders view rallies as selling opportunities rather than reversals. Market entries of new sellers reflected diminished confidence in dollar momentum after failing to build on a rebound from 155.65. The yen has strengthened on expectations of official intervention and increased BoJ signaling toward a potential near-term rate hike, prompting a repricing of the pair and sustained bearish momentum.
Read at London Business News | Londonlovesbusiness.com
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