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Currencies USD/JPY

Japanese Yen Bulls Reign Supreme as BoJ Tightening Bets Pile Up and USD Falters

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  • March 10, 2025
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The Japanese Yen is strengthening against the US Dollar, fueled by rising bets on further rate hikes by the Bank of Japan (BoJ) and decreasing interest rate differentials between the US and Japan. Latest statistics revealing sustained inflation and robust wage increases in Japan has reaffirmed prospects of sustained BoJ policy firming, sending Japanese government bond yields to multi-year highs. Conversely, the US Dollar is weakening with rising expectations that the Federal Reserve will start to reduce interest rates later this year after weaker-than-anticipated job market data. Also, geopolitical risks and renewed US trade policy concerns are increasing the safe-haven demand for the Yen, keeping the USD/JPY currency pair bearish. KEY LOOKOUTS • Market expects additional BoJ tightening due to ongoing inflation and wage growth, underpinning Japanese Yen strength versus the US Dollar. • Constricting interest rate differential continues to favor the lower-yielding Yen, putting additional downside pressure on the USD/JPY currency pair. • Sluggish US employment data and economic worries support multi-Fed rate cut expectations, further undermining the Dollar outlook. • Increasing global trade tensions and economic uncertainty boost investor demand for the Yen as a haven currency. The Japanese Yen continues to be on a solid ground as markets increasingly factor in additional interest rate increases by the Bank of Japan (BoJ) due to increasing wage growth and lingering inflation in the local economy. This has seen the yields of Japanese government bonds shoot up, even further reducing the interest rate spread between Japan and the United States. In the meantime, the US Dollar falters under increasing speculation that the Federal Reserve will launch a rate-cutting cycle after weak labor market data. Contributing to the Yen’s attractiveness is its safe-haven status, which gathers strength in the face of global trade uncertainty and economic worries over US trade policy. These factors combined continue to bear down on the USD/JPY pair, pointing to further downside momentum in the near term. The Japanese Yen remains firm on increasing hopes of BoJ rate hikes and declining US-Japan yield differentials. Poor US economic data and safe-haven buying further dampen the USD/JPY pair. • Rising inflation and robust wage growth enhance the prospects of additional interest rate hikes by the Bank of Japan. • Japanese government bond yields jumped to 2009 highs, aiding Yen appreciation. • The US-Japan interest rate spread is still decreasing in favor of the Japanese Yen compared to the US Dollar. • Current US jobs data and economic reports increase anticipation of several Fed rate cuts in the current year. • Global uncertainties and trade tensions boost the safe-haven appeal of the Japanese Yen. • USD/JPY continues to be bearish, with support at around 146.00 and room for further downward movement towards 145.00. The Japanese Yen is still strengthening as hopes rise for additional interest rate increases by the Bank of Japan (BoJ). Robust wage growth and ongoing inflation in Japan have supported the view that the central bank will further tighten its monetary policy. This follows a rise in government bond yields and a significant shift in Japan’s economic landscape, where labor unions are demanding substantial wage hikes. The overall mood indicates increasing optimism over Japan’s economic strength and the BoJ’s willingness to intervene against inflationary pressures. USD/JPY Daily Price Chart Chart Source: TradingView Conversely, the US Dollar is in a bearish mood as a result of less-than-anticipated employment figures and increasing fears about the US economic outlook. Market participants now expect the Federal Reserve to start lowering interest rates ahead of schedule, further eroding the Dollar’s attractiveness. Also, doubts regarding US trade policy and global economic threats continue to fuel the safe-haven appetite for the Japanese Yen. Such divergence in Japan-US central bank policies and attitudes towards the economy continues to remain a major impetus in tightening the Yen’s grip in world markets. TECHNICAL ANALYSIS The USD/JPY pair presents a bearish picture as it continues to hover below major resistance levels, signifying downward movement. A persistent dip below the 147.00 level can validate further weakening, with the support areas of 146.50 and 146.00. The Relative Strength Index (RSI) is near oversold levels, implying that while the pair might witness some short-term correction or minor pullback, the overall trend will be bearish. Overall, the technical configuration is in favor of sellers, with any bounce likely to meet stiff resistance around 148.00 to 148.70 levels. FORECAST USD/JPY pair is able to stay above the 147.00 mark and increases its bullish strength, it could try to undergo a short-term bounce-back. Under such circumstances, the initial resistance would most probably be encountered at the 148.00 level, followed by a stronger resistance near the 148.65–148.70 area. A prolonged passage above this area could initiate further upward momentum towards the psychological 149.00 level. If positive sentiment intensifies, the pair could even rise towards the 149.80–150.00 level, where major supply could restrict further advancements. Conversely, if the pair breaks and holds below 147.00, it may validate additional bearish pressure. The subsequent pivotal support is at 146.50, and a strong break below here would trigger the way for a deeper fall towards 146.00. Further selling momentum can see the pair probe the 145.25–145.00 region, before further support in the vicinity of the 144.80–144.75 region. The overall technical perspective is one of vulnerability for further downside price action, and only strong bullish drivers would help turn the outlook in favor of the pair.

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Currencies USD/JPY

Japanese Yen Set for Further Upside as BoJ Rate Hike Bets Build and US-Japan Rate Differentials Narrow

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  • March 6, 2025
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The Japanese Yen (JPY) reversed its intraday declines against a faltering US Dollar (USD) and is trading close to a multi-month high, fueled by increasing bets for further interest rate increases by the Bank of Japan (BoJ). Rising JGB yields and the decreasing rate differential between the US and Japan remain supportive of the JPY. Nevertheless, fears of US tariffs on Japan, rising US Treasury yields, and positive risk sentiment in the market could cap further appreciation of the safe-haven currency. While the technical indicators hint at a bearish consolidation in the USD/JPY currency pair, traders are keeping their eyes on the US Nonfarm Payrolls (NFP) report due to be released, which may provide more guidance. A fall below the 148.00 mark is still feasible, while the 150.00 level can act as resistance to any expected bounce. KEY LOOKOUTS • The market expects further interest rate hikes by the Bank of Japan to support the JPY and tighten the US-Japan yield differential. • Future Nonfarm Payrolls (NFP) and other jobs numbers will impact USD sentiment and could guide the next significant move for USD/JPY. • Fears of additional tariffs by the US against Japanese imports could bring uncertainty and affect risk sentiment, which can influence JPY’s safe-haven demand. • USD/JPY is marked at important support around 148.00, with a breakdown lower to intensify downside potential, while resistance around 150.00 might limit rebounds. Japanese Yen (JPY) is still in the spotlight as investors watch for major economic and geopolitical drivers underpinning its direction versus the US Dollar (USD). Hopes for additional rate increases by the Bank of Japan (BoJ) still underpin the JPY, reducing the US-Japan yield gap and making the currency stronger. In the meantime, the highly anticipated US Nonfarm Payrolls (NFP) report is set to be a key driver, dictating USD sentiment and determining the next direction for the USD/JPY currency pair. Furthermore, fear of possible US tariffs on Japanese imports introduces a degree of uncertainty, which may affect risk appetite and propel demand for safe-haven currencies such as the JPY. Technically, the 148.00 support is still key, with a breach through it possibly fueling further losses, while the 150.00 psychological resistance could limit any near-term bounces. The Japanese Yen (JPY) continues to appreciate against the US Dollar (USD) on the back of BoJ rate hike expectations and a declining US-Japan yield gap. But future US Nonfarm Payrolls (NFP) figures and fears of possible US tariffs on Japan could sway market sentiment. The major technical levels of 148.00 support and 150.00 resistance will decide the next big move in USD/JPY. • Increasing speculation of additional Bank of Japan (BoJ) rate increases underpins the JPY and reduces the US-Japan interest rate spread. • The JPY is at a multi-month high against the USD, erasing intraday losses as part of the broader USD weakness. • The coming US Nonfarm Payrolls (NFP) release and other jobs data will be pivotal in guiding the direction of the USD/JPY pair. • Concerns that the US is going to impose additional tariffs on Japan introduce uncertainty and could influence market sentiment. • Higher Japanese government bond (JGB) yields and declining US Treasury yields make JPY stronger against the USD. • As much as JPY gains on safe-haven demand, rising US bond yields and positive risk tone could keep further gains in check. • USD/JPY has significant support at 148.00, while resistance around 150.00 can cap potential rallies, setting the stage for the next big move. The Japanese Yen (JPY) continues to benefit from increasing hopes that the Bank of Japan (BoJ) will continue to hike interest rates. The change in monetary policy is a testiment to Japan’s changing economic terrain, where economic stability and inflationary pressures have become central concerns. The increase in Japanese government bond (JGB) yields also indicates a shift away from the nation’s historically ultra-loose monetary policy. Consequently, investors are becoming more confident in the JPY as a solid alternative during times of global economic uncertainty. Moreover, Japan’s economic resilience and government policies to maintain growth continue to support market sentiment towards the Yen. USD/JPY Daily Price Chart Chart Source: TradingView Meanwhile, geopolitical and trade-related issues continue to be significant determinants of market conditions. The recent talks about the possibility of US tariffs on imports from Japan have generated wary mood, given that trade policy can have a broader impact on economic relations between the two countries. Market participants are keeping a close eye on events, as a change in trade relationships may affect Japan’s export-oriented economy. In the meantime, the global financial market is keenly watching major economic indicators, especially in the US, where employment figures and fiscal policies might have an impact on wider currency movements. During these events, the JPY continues to be a key factor in the forex market, a reflection of Japan’s economic prowess and policy changes. TECHNICAL ANALYSIS USD/JPY pair has been consolidating in a familiar range after a sharp drop from its yearly high around 159.00. The present price action implies a bearish consolidation phase, with momentum indicators on the daily chart remaining in negative ground but not yet triggering oversold readings. This suggests that the downtrend is likely to persist, with major support at the 148.00 level, which, if broken, could speed further losses toward the 147.35 zone. On the positive side, the 149.50-150.00 area represents instant resistance, and any movement above this can possibly lead to a short-covering rally. But overall market sentiment and technical factors will then dominate the move in the next big move in the pair. FORECAST If sentiment is changed in the direction of the US Dollar (USD), then the USD/JPY can make a northward movement if there are any positive surprises on US economic numbers, like Nonfarm Payrolls (NFP), in the near future. A good jobs report would underpin the anticipation that the Federal Reserve will remain prudent in the rate-cut stance, favoring the USD. Moreover, if the world risk appetite gets better and equity markets continue

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Currencies USD/JPY

USD/JPY Crosses 150: Japanese Yen Weakens as Policy Uncertainty and Fed Expectations Bite

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  • February 28, 2025
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The Japanese Yen (JPY) has continued to depreciate against a relatively stronger US Dollar (USD), with USD/JPY breaking above the 150.00 level as uncertainty over monetary policies grips markets. Japan’s smaller fiscal budget and falling bond yields have put additional pressure on the Yen, though hopes for additional Bank of Japan (BoJ) rate hikes could cap its decline. In the meantime, investors are waiting for the US Personal Consumption Expenditure (PCE) Price Index, which may impact the Federal Reserve’s (Fed) rate policy and decide on the next step for USD/JPY. Technically, the pair is still in consolidation mode, with major resistance at 150.30 and nearby support around 149.00. The wider picture indicates the possibility of an extension of losses, yet any upside breakout would propel the pair towards the 152.40 level, a significant 200-day Simple Moving Average (SMA) resistance. KEY LOOKOUTS • The 150.30 resistance point remains important, with a breakdown below 149.00 potentially to extend losses towards the 147.00 level. • The Japanese government’s budget reductions might act to soften the Yen, yet BoJ’s resolve to raise rates might act as long-term support. • Merchants look to the PCE Price Index for hints about the Fed’s next step, affecting USD strength and USD/JPY direction. • Risk-off sentiment can increase demand for the safe-haven Yen, slowing USD/JPY gains even as the Dollar is stronger overall. The USD/JPY currency pair is still at a critical crossroads as traders balance Japan’s fiscal reforms with the Bank of Japan’s (BoJ) possible rate hikes, in addition to waiting for major US economic releases. The budget cutting of the Japanese government and decreased bond yields have been pressuring the Yen, but hopes of more monetary tightening from the BoJ might soften its fall. On the other hand, the US Dollar is strong as it awaits the release of the Personal Consumption Expenditure (PCE) Price Index, which might shape Federal Reserve policy and determine the next direction for USD/JPY. Technical analysis points to major resistance at 150.30, with a breakaway possibly taking the pair to 152.40, while support is close at 149.00. Market sentiment, especially a move towards risk-off trades, can also influence movement of the pair in the next few sessions. The USD/JPY currency pair is trading close to the 150.00 level as Japan’s fiscal policy and BoJ’s rate hike chances are compared with US economic indicators. The US PCE Price Index to be released next will have implications for Fed policy, which may affect the Dollar’s strength and Yen’s performance. The significant resistance is 150.30, while the important support lies at 149.00. • The US Dollar gains as the Japanese Yen loses strength, taking USD/JPY higher than the psychological level. • The government spending cuts and decreased bond issuance exert pressure on the Yen, regardless of BoJ’s possible interest rate hikes. • Investors also expect additional BoJ tightening that will cap excessive Yen weakening even with weaker economic data. • The next US PCE Price Index will play a pivotal role in determining the Federal Reserve’s next step. • The crucial resistance is 150.30, while the support is 149.00, with the possibility of losses to 147.00 in case of breaching. • A risk-off sentiment may underpin the Yen as a safe-haven currency, offsetting some USD strength. • Hawkish Fed rhetoric and inflation worries imply minimal near-term rate cuts, maintaining the USD strong against the JPY. The Japanese Yen remains under pressure as market participants weigh Japan’s economic policies against global monetary trends. The latest move by the government to slash its fiscal budget and cut back on bond issuance has created alarm over economic growth and financial health. The Bank of Japan (BoJ) is, however, sticking with its gradual policy shifts, expecting interest rate rises to persist as inflation edges near the central bank’s 2% target. Even as Tokyo’s Consumer Price Index (CPI) figures slowed down, BoJ Deputy Governor Shinichi Uchida reiterated the bank’s position, laying stress on the consistent uptick in core inflation. Japan’s industrial production has, however, been in decline, reflecting economic weakness that may go on to shape policy actions in the future. USD/JPY Daily Price Chart Chart Source: TradingView On the international side, investors are watching US economic data closely, especially the upcoming Personal Consumption Expenditure (PCE) Price Index, which is the Federal Reserve’s preferred inflation metric. Recent US economic data has continued to point to persistent inflationary pressures, and it implies that the Fed will keep its restrictive policy going for a more extended period of time. Policy-makers have signaled that they will maintain interest rates firm to contain inflation, and hence there is careful market sentiment. Furthermore, worry about possible inflationary threats due to future policies of the US government provides a further source of uncertainty. With traders waiting for fresh economic reports, the general market outlook remains focused on the policies of the central banks as well as the economic performance in Japan and the US. TECHNICAL ANALYSIS USD/JPY continues in a state of consolidation, with the significant levels determining its short-term path. The currency pair has been fluctuating around the 150.00 psychological level, and the immediate resistance is located around 150.30, coinciding with the weekly high. A clean break above this might unleash additional upward momentum, and the 150.90–151.00 zone could be a possible target. To the downside, robust support is noted at 149.00, with a breakdown below this level leaving the pair vulnerable to further losses in the direction of the 148.60–148.55 area. Overall trend indicates that the pair continues in a bearish consolidation pattern after its retracement from the multi-month high of around 159.00 during the early part of the year. Oscillators on the daily chart are still in negative ground, which means that selling pressure continues, and unless there is a breakout, the overall outlook still supports a downside bias. FORECAST USD/JPY may break above the crucial resistance at 150.30, with the possibility of further increases. A long-term move above this level may lead to short-covering, pushing the pair to the 150.90–151.00

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