Yen Strength Continues Amid Rate Hike Expectations

The Japanese Yen has continued its strong performance, although analysts expect it to eventually give up some of its gains. The USD/JPY pair is trading near 156.00 after the Yen rose approximately 2.4% last week. This significant increase is partly due to growing expectations of Bank of Japan rate hikes in September (75% probability) and December (60% probability). If a decisive daily close below the important 155.00 support area occurs, it could lead to a bearish technical breakdown for USD/JPY, potentially opening the way towards 150.00.

The US Dollar remains relatively soft despite surprisingly strong US jobs data released on Friday. The initial reaction was a lift in the Dollar and Treasury yields, but this effect has since been reversed. Concerns about US debt and policy uncertainty continue to limit Dollar demand, keeping it near 99.14, not far above its recent low at 98.56.

Agricultural commodities such as sugar, soybeans, and corn are maintaining their strong bullish trends. These commodities have reached or are close to multi-year highs. Trend traders are likely to remain long on these assets, given the historical profitability of trading long commodities following multi-month breakouts.