The USD/JPY currency pair has jumped to the highest level since late July. Today’s economic data indicated a drop in weekly jobless claims. The pending home sales data showed a better-than-expected rebound in September. The data reaffirmed the strength of the US economy.
The USD/JPY currency pair has been in a consolidative phase since the start of October.
A further rate hike by the Fed would allow the ECB and the Bank of Japan some opportunities to introduce new forms of easing fiscal policy. The BOJ’s easing policy was recently criticized by Toshiro Muto, a former deputy governor, who warned against further monetary stimulus. He said that this policy made unclear the boundary between fiscal and monetary policy. The US reminded Japan that the G-20 members must avoid any currency manipulations. The markets remain confident, but it's unlikely that the FED will press the rate trigger before the US presidential election.
According to the 8 hour chart, the USD/JPY pair may rise around 106.68 (0.61 Fibo), in the next period. Otherwise, the USD/JPY currency pair will be in a retracement around 105.29.