Home USD/JPY Price Analysis: Dollar Gains Amid Middle East Crisis

USD/JPY Price Analysis: Dollar Gains Amid Middle East Crisis

  • Market attention is keenly focused on unfolding events in the Middle East.
  • Traders are gearing up for pivotal speeches by central bank officials.
  • Traders indicate a mere 10% likelihood of a Fed rate hike in November.

The USD/JPY price analysis reveals a bullish trend for the pair. The greenback has gained some ground, as the market is closely watching the developments in the Middle East. Meanwhile, traders anticipate key speeches from central bank officials that could influence the monetary policy outlook.

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Valentin Marinov, Global Head of G10 FX Research and Strategy at Credit Agricole CIB, emphasized that ongoing Middle East tensions and elevated global bond yields remained primary driving factors.

Marinov emphasized that the market’s main question is the potential for further escalation. Suppose oil prices remain stable amid geopolitical tensions. In that case, it suggests that cost-push inflation may not surge. Consequently, the Fed may maintain its recent dovish stance, ruling out additional rate hikes.

Meanwhile, Federal Reserve Bank of Philadelphia President Patrick Harker expressed on Monday that the central bank should avoid imposing additional economic pressure by increasing borrowing costs. In the November meeting, Fed funds futures traders currently indicate a mere 10% likelihood of a rate hike. Moreover, there is roughly a 33% chance of a hike by December.

On the other hand, the yen held steady near 150 per dollar, causing apprehension among investors for potential intervention by Japanese authorities. Japan’s top financial diplomat, Masato Kanda, noted that despite recent weakness, the yen was still considered a safe-haven asset. Therefore, the Middle East conflict bolstered demand for the yen.

USD/JPY key events today

The US will release major reports that will help investors assess consumer spending in the country. These reports are 

  • US retail sales.
  • US core retail sales.

USD/JPY technical price analysis: Bullish trend hinges on overcoming 150.00 Resistance.

USD/JPY technical price analysis
USD/JPY 4-hour chart

The USD/JPY price is pushing off the 149.50 key level, with bulls in the lead. This move continues the bullish move that paused to retest the 149.50 support. Bulls have been in control since the price reversed at the 148.51 support level. Moreover, they have solid momentum to make new highs as the RSI is above 50. 

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However, this bullish move can only continue if the price exceeds the 150.00 resistance level. The last time the price got to this resistance, bears took over. Therefore, it will be a big test for the current move.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.