USD/JPY slides to 144.00 amid escalating intervention concerns

Japanese financial diplomat Masato Kanda revealed that authorities are maintaining close communication with US Treasury Secretary Janet Yellen and other international officials on a daily basis to discuss currencies and broader financial markets. This regular contact aims to stay updated and coordinated on the latest developments, as reported by Reuters.

In London, S&P500 futures have extended their losses ahead of the US market opening following a holiday. Investors are expected to focus on individual stocks as the corporate earnings season is set to commence in the upcoming week.

The US Dollar Index (DXY) has been experiencing volatile spikes as investors eagerly await the release of the Federal Open Market Committee (FOMC) minutes. These minutes are anticipated to provide a detailed explanation for the Federal Reserve (Fed) Chair Jerome Powell's decision to keep interest rates unchanged during the June policy announcement.

According to the CME Fedwatch tool, there is a high likelihood of a 25 basis points (bps) interest rate hike, raising rates to 5.25-5.50%. Atlanta Fed Bank President Raphael Bostic supports further tightening of monetary policy, suggesting that interest rates have reached a level where they are sufficiently restrictive to bring inflation down to the Fed's target of 2%.

Looking ahead, investors will shift their attention to the Nonfarm Payrolls (NFP) data for June. The preliminary report indicates the addition of 225,000 new employees, compared to the previous addition of 339,000. The Unemployment Rate is expected to decline to 3.6%. Positive labor market data could strengthen the case for additional interest rate hikes by the Fed.

Technical Analysis :

Our preference

Long positions with targets at 146.00 & 147.00 in extension.

Alternative scenario

Below 141.30 look for further downside with 138.00 & 134.00 as targets.