12:37 PM · 11 July 2022

USDJPY highest since September 1998

The USDJPY pair hit a fresh 24-year high on Monday, after Japan's governing Liberal Democratic Party and its coalition partner Komeito scored a major victory in a parliamentary election Sunday , two days after the assassination of dominant politician and power broker Shinzo Abe. This victory signals no change in loose monetary policies. The dovish rhetoric from the Bank of Japan puts pressure on Yen. Central bank plans to keep interest rates low to support the economy, while the FED sticks with its aggressive rate hikes which aims to curb rising inflation. BOJ Governor Haruhiko Kuroda also said recently the central bank “won’t hesitate to take additional monetary easing steps as necessary.”

Japan's upper house balance of power after the election. Source: Nikkei

From a technical point of view, USDJPY pair broke above 137.00 level, reaching its highest level since September 1998. If buyers manage to defend this level, upward move may accelerate towards 147.00, where highs from summer 1998 are located. On the other hand, the RSI oscillator on the monthly chart still remains in overbought territory, therefore traders should act with caution before placing fresh bullish bets. Source: xStation5

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