The US-China trade war is getting tougher with new rounds ahead. Gradually turning into a currency war, we may see that the US dollar continues to fall against the Japanese yen, serving as a safety currency. Today, the Japanese currency is seen as a winner and the USD/JPY pair as a key barometer of market sentiment.
USD/JPY amid intensifying trade war
When a currency appreciates, like the Japanese yen today, exporting manufacturers become the first victims. According to the USD/JPY prediction, it's too soon to expect long-term damage for the Japanese businesses, however, the anxiety is flying around.
Yuji Kameoka, chief currency analyst at Daiwa Securities Co shares, “The fact that the yen has appreciated against the dollar is going to be a negative factor for Japanese companies in addition to the global economy slowdown”.
China has let its currency drop in order to fight back at President Trump's new promised levies. The yuan weakening may restrain the effect of tariffs and help exporters, but it also may cause capital outflows from the world's #2 largest economy.
Beijing is trying to stabilise the yuan and help markets to recover. And the Japanese yen is sought as the ultimate safe-haven in times of trouble.
USD/JPY latest forex forecast
At the end of summer 2019, the US dollar vs Japanese yen currency pair continued to suffer from a strong downside momentum. The USD/JPY price was fluctuating around 105.00, as of 12 August 2019. 105.00 was considered a critical support line, holding the USD/JPY pair from further falling. According to the USD/JPY analysis, if the market broke below the 105.00 level, it would continue falling down to 102.50. Speaking about the upside, the resistance was at 106.5, which was the previous support level in early August.
On 2 October 2019, the USD/JPY pair climbed to its fresh daily highs above 108. The USD/JPY turned north, after spending the day fluctuating in a narrow range below the 108 handle. The positive risk sentiment was caused by the soaring performance of the major US stock market indices. A better market mood helped the USD/JPY pair to advance, however, analysts doubt the prospects for a sustained rise above this level. To find the directional strength, the pair should break a new key resistance area around 108.50.
Trade US Dollar / Japanese Yen CFD
USD/JPY analyses and sentiment
If there is no any positive dynamics in the US-China trade war so far, it's hard to predict any long-lasting USD/JPY upside movement. In general, there are more chances for further falling rather than soon recovery. The USD/JPY pair has been declining since hitting its 2019 high of 112 in April.
According to the USD/JPY expectations by the FXStreet Poll, analysts have reduced their short-term and long-term targets, but haven't changed the medium objective.
The burning trade tensions between the US and China, as well as between South Korea and Japan, continue to boost the demand for the anti-risk Japanese yen. Looking forward, the USD/JPY currency pair will depend on fresh Trump's comments and the US key economic data.
Today, the yen continues proving its safe-haven status for several reasons. Japan has current account surpluses, which provide yen with a strong foundation. It occurs, when exports exceed imports, providing support for the demand for yen in the long run. The Japanese yen is also well-traded, i.e. it's a liquid currency, which is considered as a reserve currency for the Asian countries.
What you need to know about USD/JPY currency pair
The USD/JPY forex pair is nicknamed 'The Ninja', after a popular superheroic character, created in Japan. The US dollar vs Japanese yen coupling assesses the value of the two superpowers' currencies against each other, establishing how many yen you need to buy one US dollar.
To better understand what affects the USD/JPY rate you should consider some key factors.
- The USD/JPY rate fluctuates depending on import and export prices. Japan has always relied on export, so the Japanese government and the BOJ (Bank of Japan) has already intervened in the currency markets several times – keeping the interest rates low – to make their goods more attractive on the international arena.
- The US Federal Reserve decisions regarding the interest rate also influence the dollar-yen pair price movements.
Why USD/JPY is so attractive to Forex traders?
The American dollar is the #1 traded currency in the world. The Japanese yen is the #3.
The USD/JPY currency pair is considered is classified as one of the majors on the FX market. The pair often has a low bid-ask spread and high liquidity. Its extreme volatility attracts numerous investors and traders, who try to catch up with exciting opportunities to try and benefit from the rising and falling USD/JPY market.
USD/JPY: buy or sell?
Today, the downward momentum has slowed down a bit and shown signs of consolidation. Even though the support level has managed to survive a few tests and some fake breakthroughs, no it's still early to talk about a market turn. Only a retracement up to 108.50 and a break of this level may signalise a potential market’s U-turn.
With contracts for difference, it does not matter whether your view of the USD/JPY forecast is positive or negative. You can always try to profit from the future price fluctuations, regardless of their direction. Follow the latest forex news and track the USD/JPY live rates with Capital.com.