Market Sector Scanner: USD/JPY Intervention Risk, Oil and U.S. Bond Yields

Oil prices started the week strongly, with WTI moving above $100 after attacks on oil facilities in Saudi Arabia increased concerns about supply from the Middle East. Higher oil prices and rising U.S. bond yields also put pressure on stock markets. Later in the week, attention moved to the Federal Reserve and Bank of Japan, with both central banks raising interest rates by 0.25% as expected. All Fed members supported the increase, while the Bank of Japan decision passed by a 7–2 vote. USD/JPY moved higher after the BoJ meeting as some traders had expected stronger comments about future rate increases. However, USD/JPY fell back late on Friday after reports that the Bank of Japan had checked currency rates increased concerns about possible intervention.

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Market Outlook

Forex Market

USD/JPY

Last Week Recap
USD/JPY moved back above 155 early last week as oil prices rose and traders prepared for the Fed and Bank of Japan meetings. The Fed suggested that more interest rate increases may be needed, while two BoJ members voted against the rate increase. USD/JPY moved close to 158 before reports of a BoJ rate check increased concerns about intervention and pushed the pair lower.

Technical Picture
The recent downtrend has stopped for now, with USD/JPY holding above the important 155 support level. The 10-day moving average is also starting to move sideways, suggesting the market may enter a range.

Outlook This Week
USD/JPY looks balanced, with intervention risk limiting the upside while the large interest rate gap between the U.S. and Japan could support the pair. Range trading is likely this week, especially with Japanese holidays early in the week. Support is around 155, with resistance around 158.

GBP/JPY

Last Week Recap
GBP/JPY was quiet for most of last week after the Bank of England kept interest rates unchanged. However, yen weakness following the Bank of Japan meeting and stronger UK retail sales helped GBP/JPY finish the week strongly.

Technical Picture
GBP/JPY closed above its 10-day moving average and the important 210 level. This suggests the recent downtrend may be over for now, with the pair likely to trade sideways to higher in the short to medium term.

Outlook This Week
GBP/JPY could remain supported this week after the Bank of Japan suggested it is unlikely to raise interest rates quickly. Looking for buying opportunities on weakness may be the preferred approach, especially while the pair remains above 210.

EUR/USD

Last Week Recap
EUR/USD fell sharply last week as the Federal Reserve raised interest rates and strong U.S. retail sales supported the dollar. Weaker-than-expected EU inflation data also added pressure to the euro.

Technical Picture
The large fall has left EUR/USD oversold in the short term. The move back above the lower Bollinger Band on Friday is a short-term buy signal and could support a recovery.

Outlook This Week
The medium-term outlook for EUR/USD remains negative, as the Fed could continue to raise interest rates if oil prices remain high. However, with the pair oversold after last week's fall, a short-term recovery is possible before the downtrend continues.

Equities

U.S. Stock Market

Last Week Recap
The Nasdaq fell early last week as traders expected a Fed rate increase and the U.S. 10-year bond yield reached 5%. Higher oil prices also put pressure on technology stocks. However, the Nasdaq recovered later in the week as support held and AI stocks moved higher.

Technical Picture
The Nasdaq found support at the lower Bollinger Band and then moved back toward the upper band. The 10-day moving average remains flat and the Bollinger Bands are getting narrower, showing that the market remains in a range.

Outlook This Week
Range trading remains the preferred approach in the short term. The outlook is also more balanced over the medium term, as the Fed rate increase did not lead to heavy selling.

Commodities

Gold

Last Week Recap
Gold moved lower early last week as U.S. long-term bond yields and WTI crude oil prices rose. However, selling was limited after the expected U.S. interest rate increase. Gold then recovered as oil prices eased and finished the week strongly.

Technical Picture
Gold held above support from early September and moved back above the 10-day moving average. This suggests the recent short-term weakness may be over.

Outlook This Week
Gold performed well last week despite higher U.S. interest rates. While the price remains above the 10-day moving average, looking for buying opportunities on weakness is the preferred approach this week.

Japanese markets will be quieter at the start of the week, with holidays on Monday, Tuesday and Wednesday. USD/JPY will remain in focus after reports of a rate check on Friday increased concerns about possible intervention. With few major economic releases before Friday, traders will also have more time to react to last week's Federal Reserve and Bank of Japan meetings. WTI crude oil will be closely watched around $100, while further rises in U.S. 10-year Treasury yields could put more pressure on stock markets.