USD/JPY Tests New Highs Near 152

Key Insights

• USD/JPY continues to move higher as the BoJ fails to provide any support to the Japanese yen. 
• GBP/USD is under pressure amid political uncertainty in the UK. 
• USD/CAD faced strong resistance at 1.3850 and pulled back. 

USD/JPY Rallies Despite Intervention Fears

USD/JPY tested new highs at 151.94 after a successful test of the important 150 level.

Japanese Finance Minister Suzuki said that Japan would not tolerate excessive moves by speculators. However, the market does not see any serious attempts to stop the rally, so traders keep buying USD/JPY.

From the technical point of view, USD/JPY is overbought. At this point, a pullback looks inevitable as some traders will prefer to take profits off the table after the huge rally. From the fundamental point of view, the key factor behind the rally – the ultra-dovish policy of the BoJ – remains intact. In this light, USD/JPY has a good chance to test new highs in the upcoming trading sessions.

U.S. Dollar Is Swinging Between Gains And Losses Ahead Of The Weekend

U.S. Dollar Index made an attempt to settle above 113.90 but lost momentum and pulled back below the 113 level as Treasury yields declined after testing new highs.

Markets remain nervous as Treasury yields have settled in the levels that were last seen back in 2007 – 2008. Most likely, the American currency will remain extremely sensitive to changes in Treasury yields.

EUR/USD Rebounded Towards 0.9800

EUR/USD made an attempt to settle back above 0.9800 after Euro Area Consumer Confidence report indicated that Euro Area Consumer Confidence improved from -28.8 in September to -27.6 in October, compared to analyst consensus of -30.

While the Euro Area Consumer Confidence remains at low levels, a minor improvement is a welcome sign for EUR/USD bulls. However, it remains to be seen whether this report will provide any sustainable support to the European currency.

GBP/USD Remains Under Pressure

GBP/USD stays volatile as traders wait for the election of the new Prime Minister. Today, GBP/USD made an attempt to settle below 1.1060 before rebounding towards 1.1150.

It should be noted that the yield of 10-year UK government bonds has recently moved back above the 4.00% level, indicating that traders remained worried about the health of the British economy. In case yields continue to move higher, GBP/USD may find itself under more pressure as traders will rush to the safety of the American currency.

USD/CAD Tested Resistance At 1.3850

USD/CAD declined towards 1.3750 after an unsuccessful test of the resistance at 1.3850. Today, Canada reported that Retail Sales increased by 0.7% month-over-month in August, compared to analyst consensus which called for an increase of just 0.2%. The report provided some support to the Canadian dollar.

Meanwhile, AUD/USD settled near the 0.6300 level, while NZD/USD moved towards 0.5700. In case the rebound in commodity markets continues, commodity-related currencies will get more support.

For a look at all of today’s economic events, check out our economic calendar.