On Wednesday, the USD/JPY exchange rate was up by 0.1%, sitting around 162.73. This increase points to the US dollar’s strength, attributed mainly to a rise in US Treasury yields.
The yield on the 10-year U.S. Treasury climbed by 0.18% to 4.47%, building on Tuesday’s significant gain of over 2%. Additionally, the US Dollar Index (DXY), which measures the dollar against six major currencies, increased by 0.16% to approximately 101.33.
USD price today
The following table outlines the US dollar’s percentage changes against key currencies. Notably, the dollar performed strongest against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.12% | 0.14% | 0.08% | 0.10% | 0.36% | 0.02% | 0.05% | |
| EUR | -0.12% | 0.02% | -0.04% | -0.01% | 0.26% | -0.11% | -0.05% | |
| GBP | -0.14% | -0.02% | -0.06% | -0.03% | 0.22% | -0.13% | -0.05% | |
| JPY | -0.08% | 0.04% | 0.06% | 0.00% | 0.29% | -0.09% | -0.01% | |
| CAD | -0.10% | 0.01% | 0.03% | -0.01% | 0.27% | -0.11% | -0.02% | |
| AUD | -0.36% | -0.26% | -0.22% | -0.29% | -0.27% | -0.37% | -0.29% | |
| NZD | -0.02% | 0.11% | 0.13% | 0.09% | 0.11% | 0.37% | 0.09% | |
| CHF | -0.05% | 0.05% | 0.05% | 0.01% | 0.02% | 0.29% | -0.09% |
This heat map illustrates the percentage changes for major currencies, where the left column shows the base currency and the top row the corresponding quote currency. For instance, if you select USD and look at the JPY row, the value displayed represents the USD relative to the JPY.
Sharply rising U.S. Treasury yields signal a strengthening job market in the U.S. Recent JOLTS data for May, released on Tuesday, showed 7.594 million job openings, surpassing expectations of 7.3 million and the previous figure of 7.585 million.
Investors are now keenly awaiting the June US ADP employment report and ISM Manufacturing PMI data set to be published later in North America.
In the Tokyo market, there are growing expectations that the Japanese government will soon step in to stabilize the weakening yen. Japan’s Chief Cabinet Secretary, Minoru Kihara, indicated on Tuesday that the government is ready to act concerning foreign exchange at any moment, though he did not specify particular currency levels.
Technical analysis of USD/JPY
The USD/JPY pair has climbed to about 162.73, bolstered by a bullish sentiment, as it remains well above the 20-day exponential moving average (EMA) of 161.19. The pair’s overall trend is positive, particularly following a breakout from the rising channel pattern.
The Relative Strength Index (RSI) currently indicates strong upward momentum at 78.45, although it also signals potential for corrective pullbacks within this broader uptrend.
On the downside, immediate support levels are located near 161.75 in the breakout region of the rising channel, followed by the 20-day EMA around 161.19. Looking upwards, the pair could potentially rally toward 163.00 and then 164.00.
US Dollar Frequently Asked Questions
The US Dollar (USD) serves as the official currency of the United States and is also widely accepted in various other countries, often used alongside local currencies. It holds the title of the world’s most traded currency, making up over 88% of global foreign currency trading, equating to an average daily trading volume of $6.6 trillion, per 2022 statistics. Post-World War II, the US dollar replaced the British pound as the leading reserve currency, having been backed by gold until the gold standard was abandoned during the 1971 Bretton Woods agreement.
The most crucial element influencing the US dollar’s value is the monetary policy set by the Federal Reserve (Fed). The Fed’s responsibilities include achieving price stability (keeping inflation in check) and ensuring maximum employment. The primary means of achieving these objectives is through adjusting interest rates. When inflation exceeds the Fed’s 2% target, they typically respond by raising rates to bolster the dollar. Conversely, if inflation dips below 2% or unemployment rises significantly, the Fed might lower interest rates, which could negatively impact the dollar.
In specific extreme situations, the Federal Reserve might also increase the dollar supply through quantitative easing (QE). This involves boosting credit flow in a stagnant financial system, a non-standard approach used primarily when credit markets are tight. QE was notably employed during the 2008 financial crisis, where the Fed printed dollars to buy U.S. Treasuries, which generally leads to a weaker dollar.
Quantitative tightening (QT) is the contrasting approach where the Fed refrains from purchasing bonds and does not reinvest the principal from maturing bonds into new ones. This process is typically favorable for the US dollar.
