Fundamental Analysis

  • Driven by surging crude oil prices following the US military attack on Iran and the closure of the Strait of Hormuz, downward pressure on the yen is strengthening. Since this yen depreciation is in line with fundamentals, wariness of FX intervention is low. Therefore, the USD/JPY is expected to break through 160 yen and target 161.95 yen. Supported by the 10-day moving average on the daily chart, continuing to buy on dips is recommended until oil prices stabilize. However, caution is advised regarding downward pressure on the Nikkei Stock Average.

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Will it break 160 yen?

Although the US launched a military attack on Iran, the market was surprisingly optimistic. However, attacking a major Middle Eastern power has led to the closure of the Strait of Hormuz, undoubtedly causing a significant impact on energy, foreign exchange, and stock markets. Energy prices are on the verge of approaching $100 again, and the downward pressure on the yen is growing stronger.

The key point this time is that the yen's depreciation is driven by soaring crude oil prices, meaning it is not a speculative move. It is moving in line with fundamentals, which does not provide a justification for FX intervention. This means that caution regarding intervention near the 160 yen mark is fading.

We anticipate a move that breaks through 160 yen, targeting 161.95 yen. It will likely be a long time before the Strait of Hormuz becomes safe again. Under these circumstances, we believe the trend will eventually move further toward yen depreciation.

We intend to continue buying on dips. Caution is advised for the Nikkei Stock Average, as it will be under downward pressure.

[USD/JPY / Daily Chart]

Continue buying on dips

The price is above the linear regression line, making this a phase where we want to continue buying on dips. Supported by the 10-period moving average, it is aiming to break through 160 yen. If it breaks 160 yen, it may trigger stop-loss orders, potentially making it easier for the price to accelerate upward.

The target price is 161.95 yen.

If the soaring crude oil prices settle down, the sharp rise in the USD/JPY may also ease, so we want to pick up on the dips.

[USD/JPY / 1-Hour Chart]