USD/JPY Bounces on Rising US Rates, But Market Remains Cautious
The US dollar has made a rebound against the Japanese yen, as interest rates in America are on the rise. The 10-year yield is heading toward the 4.93% level, and this is contributing to the USD/JPY's upward momentum.
According to technical analyst Christopher Lewis, the pair has found support at the ¥153 level and is now challenging the ¥154.50 mark. However, Lewis notes that if the Americans raise rates on Wednesday and the Japanese do the same on Thursday, it may not be enough to significantly change the currency pair's dynamics.
Lewis remains bullish on the USD/JPY but acknowledges that his confidence has waned slightly due to the interest rate differential between the two countries. He points out that Japan's economy is vulnerable to higher rates due to its significant debt load, and any increase in borrowing costs could have a detrimental impact.
As inflationary pressures continue to be a concern for both economies, Lewis suggests that the market may be consolidating above the ¥152 level. However, if the Japanese core CPI comes out hotter than anticipated at 0.2% month over month, it could lead to a significant jump in the US dollar.