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Japanese Yen Gains on Strong GDP Data, Puts Pressure on USD/JPY Near One-Week Low

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  • February 17, 2025
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The Japanese Yen (JPY) continues to hold strong gains after a strong Q4 GDP report supported expectations of more interest rate increases by the Bank of Japan (BoJ). Narrowing US-Japan rate difference, combined with persistent weakness of the US Dollar (USD) amid disappointing US retail sales and market skepticism around Trump’s offered reciprocal tariffs, holds the USD/JPY pair close to a one-week low. Owing to hawkishness offered by the Federal Reserve, offering some support for the USD notwithstanding, the functional bias remains skewed towards JPY bulls, making a further lower direction for the currency pair quite likely. Support levels are key around 151.40 and 150.00, with any bounce being met with resistance at 152.70 and higher.  KEY LOOKOUTS • Solid Q4 GDP growth of 2.8% supports the view that the Bank of Japan will keep tightening monetary policy. • A soft US Retail Sales report and worries over Trump’s retaliatory tariffs keep the USD at a two-month low, bearing down on the USD/JPY pair. • The diminishing gap between US and Japanese interest rates strengthens the Yen, increasing investor confidence in Japan’s currency amid BoJ’s hawkish stance. • USD/JPY faces immediate support near 151.40, with further downside potential toward 150.00, while resistance lies at 152.70 and 154.00. The Japanese Yen continues to strengthen as robust Q4 GDP data reinforces expectations of further interest rate hikes by the Bank of Japan (BoJ). The decline in the US-Japan rate differential and continued US Dollar softness, fueled by soft US Retail Sales data and reservations regarding Trump’s proposed tit-for-tat tariffs, maintain the USD/JPY cross close to a one-week low. Although the Federal Reserve’s hard-dollar bias lends some support to the USD, overall sentiment remains in favor of JPY bulls. Critical support for the duo comes around the 151.40 and 150.00 points, whereas any bounce could see stiff resistance near 152.70 and 154.00. The Japanese Yen is still strong following positive Q4 GDP numbers, further solidifying BoJ rate hike expectations and putting pressure on USD/JPY around a one-week low. Poor US Retail Sales and Trump’s reciprocal tariffs worries also bear down further on the USD, as key support and resistance levels at 151.40 and 152.70, respectively. • Japan’s Q4 GDP increased by 2.8%, further solidifying hopes for additional Bank of Japan (BoJ) rate hikes. • The Japanese Yen holds its ground, driving the USD/JPY pair down as the US Dollar weakens. • A steep 0.9% decline in US retail sales puts further pressure on the USD, dampening investor sentiment. • Uncertainty in the markets regarding Trump’s tariffs plans on US imports is adding to USD weakness and JPY strength. • A narrowing gap between US and Japanese interest rates is further adding to the bullish momentum of the Yen. • USD/JPY is supported close to 151.40 and 150.00, but resistance is found at 152.70 and 154.00. • The USD gets some support from the Fed’s determination to hold rates higher, capping USD/JPY losses deeper than this. The Japanese Yen keeps gaining strength with Japan’s 2.8% Q4 GDP growth increasing hopes of higher rate hikes from the Bank of Japan (BoJ). The constricting US-Japan rate gap, coupled with soft US economic indicators, has held the USD/JPY pair close to a one-week low. The US Dollar is still under the gun after the sudden 0.9% fall in US retail sales to signal weakening consumer expenditures. Moreover, uncertainty surrounding former President Donald Trump’s so-called reciprocal tariffs has contributed to market uncertainty, which has dampened the USD further. Investors currently expect a stronger Yen in the short term, with major support levels at 151.40 and 150.00. USD/JPY Daily Price Chart TradingView Prepared by ELLYANA Even though the USD is weak, the Federal Reserve’s aggressive stance on interest rates serves as a counterbalance, stopping further losses in the USD/JPY pair. The Fed’s hesitation to reduce rates in the near future gives some relief to the USD, but its upside is still limited by prevailing sentiment. The USD/JPY technical levels are being watched closely by traders, with resistance at 152.70 and 154.00, which would see a short-covering rally if broken. Still, with the BoJ tightening measures and a closing rate gap, the bullish momentum in the Yen is set to continue, placing pressure on the currency pair during the next few sessions. TECHNICAL ANALYSIS USD/JPY currency pair is trading close to significant support levels at 151.40, with further downside risk towards the psychological 150.00 level. Daily chart oscillators are still in bearish territory, and the decreasing US-Japan rate gap continues to support the Yen. A slide below 150.90 could further enhance selling pressure, driving the pair towards the 149.60-149.55 range and possibly testing the 149.00 support. On the higher side, any bounce might find stiff resistance at 152.70, which coincides with the 200-day Simple Moving Average (SMA). A breakout above 153.15 (100-day SMA) may result in a short-covering rally, pushing the pair to 154.00 and the 154.75-154.80 supply area. But since fundamentals favor the Yen, the overall trend will remain bearish unless USD bulls take charge again. FORECAST USD/JPY pair can recover if some conditions are met. A breach above the 152.00 level may propel the pair towards the robust resistance level of 152.70, where the 200-day Simple Moving Average (SMA) is located. A firm breakout above this level might lead to a short-covering rally, driving the pair towards the 153.15 region (100-day SMA). If bullish pressure intensifies, the subsequent target is around the 154.00 psychological level, then the 154.45-154.50 supply zone. Another push higher might have the pair retracing last week’s high in the vicinity of the 154.75-154.80 area, if the US Dollar regains power on the back of aggressive Federal Reserve policy or improved risk appetite for global markets. USD/JPY remains below 152.00, with near-term support around 151.40-151.45. A break below here might trigger selling pressure faster, taking the pair down to 150.90, which is the lowest level since December 10. Further falls might test the psychological 150.00, with longer losses making the descent towards the support

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Currencies USD/JPY

USD/JPY Consolidates Amid Trade War Fears and BoJ Rate Hike Speculations

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  • February 11, 2025
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The USD/JPY currency pair remains in a consolidative phase around the 152.00 mark due to conflicting factors that are currently influencing market sentiment. On the one hand, US President Donald Trump’s new tariffs on steel and aluminum imports have reignited global trade war fears, thereby boosting the safe-haven appeal of the Japanese Yen. On the flip side, expectations of a delay by the Federal Reserve in terms of rate cuts amidst inflationary pressures are buoying the US Dollar. On the other hand, increasing speculations that the Bank of Japan (BoJ) will raise interest rates further are bolstering the Yen but are offset by concerns of instability in Japan’s economy due to Donald Trump’s policies. From a technical standpoint, the pair faces resistance at 152.50, with a downside bias suggesting potential declines toward the 151.00-150.90 zone if selling pressure intensifies. However, a breakout above 152.50 could pave the way for further gains toward 153.00 and beyond. Traders now await Fed Chair Jerome Powell’s testimony and US inflation data for clearer direction. KEY LOOKOUTS • The new 25% tariffs on steel and aluminum imports will likely disrupt global trade, enhancing the safe-haven appeal of JPY and raising concerns about the stability of Japan’s economy. • As inflation remains above the 2% target, growing expectations of further interest rate hikes by the Bank of Japan may strengthen the Yen. • The Federal Reserve’s decision on rate cuts, which is largely dependent on Powell’s testimony and US inflation figures, will be crucial in determining the next move of USD/JPY. The USD/JPY pair is at a critical juncture as multiple factors shape its trajectory. Recent US tariffs under Donald Trump have only added fuel to concerns of a global trade war, making the Japanese Yen a safe haven currency while sowing uncertainty over the stability of Japan’s economy. Meanwhile, speculations about additional interest rate hikes from the Bank of Japan continue to be positive for the Yen as inflation remains higher than the 2 percent target of the central bank. Meanwhile, any signals from Fed Chairman Jerome Powell or upcoming data that could either accelerate or restrain monetary policy should propel the course in the USD currency. It looks like resistance and support of key levels appear below at around 152.50. Thus a sustained pull from the inside bar zone may turn out towards significant further deterioration at 151.00 – 150.90. Of late, markets continue to keep themselves busy focusing keenly over future economic events of the economic states. USD/JPY still trades in the range, though, with fresh tariffs by Trump fueling fear of a full-blown trade war that strengthens the Yen. Uncertainty in Fed rate cut also helps support the USD. BoJ’s potential rate hike further impacts the sentiment. 152.50 resistance and 151.00-150.90 support form the pair’s next direction of movement. Further direction would now be sought on Powell’s testimony and US inflation data. • The imposition of 25% tariffs on steel and aluminum imports by President Trump increases global trade tensions, enhancing the safe-haven appeal of the Japanese Yen. • Inflation above the 2% target would further encourage the Bank of Japan to increase interest rates, supporting the JPY. • Market attention is focused on Fed Chair Jerome Powell’s testimony and US inflation data, which will help decide the central bank’s next monetary policy move. • The US Dollar is buoyed by growing hopes that the Fed will postpone the rate cuts, as economic and labor market conditions are surprisingly robust. • USD/JPY has hit a significant resistance zone at 152.50 where the 100- and 200-day SMAs are located. • If the pair falls below this crucial support zone, it will create further selling momentum to the psychological 150.00 mark. • Traders remain vigilant in the days ahead as geopolitics, inflation figures, and the decisions of the central banks influence the USD/JPY direction. USD/JPY is still trading in a consolidation mode due to the uncertainty surrounding the global economy and the decisions of the central banks. Recent 25% tariffs announced by US President Donald Trump on imports of steel and aluminum have resurfaced fears of a trade war, making the safe haven Japanese Yen an attractive bet for traders. However, the possibility of retaliatory measures and disruption in trade agreements against Japan’s economy has kept further JPY gains at bay. Meanwhile, expectations of more rate hikes by the BoJ continue to be supportive of the Yen, with policymakers indicating that the increase might reach 1% by the second half of the fiscal year. USD/JPY Daily Chart TradingView Prepared by ELLYANA It will be hard for the BoJ to avoid hiking the rate further, given that inflation in Japan is consistently above the central bank’s 2% target. On the other hand, the US Dollar remains strong as market players anticipate the Federal Reserve may delay lowering interest rates due to concerns of sustained inflation. Investors will be on the lookout for the congressional testimony by Fed Chair Jerome Powell and US consumer inflation figures released shortly, which would shed light on the central bank’s intentions. TECHNICAL ANALYSIS USD/JPY pair is consolidating near the 152.00 level, facing strong resistance at 152.50, where the 100-day and 200-day Simple Moving Averages (SMAs) converge. A decisive break above this key level could trigger a short-covering rally, pushing the pair towards the 153.00 psychological mark, with the next resistance around 153.75. On the downside, immediate support is seen at the 151.30 level, followed by the 151.00-150.90 zone, which has acted as a strong base in recent sessions. A sustained move below this range could accelerate the bearish momentum, exposing the pair to further declines toward the 150.55 intermediate support and the crucial 150.00 psychological level. Besides that, oscillators on the daily chart are in negative territory but have not entered the oversold zone, and thus selling pressure might continue unless a strong bullish catalyst appears. FORECAST The USD/JPY currency pair might be on the path for a bullish breakout if it succeeds in sustaining its move above the

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Currencies USD/JPY

USD/JPY Outlook: Japanese Yen Falls Amid BoJ Rate Hike Expectations, Trump’s Tariff Concerns

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  • February 10, 2025
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The Japanese Yen is weakening further amid concerns that former US President Donald Trump might impose further trade tariffs against Japan, weighing on the latter’s economy. Though a marginal U.S. Dollar strength in the USD/JPY exchange rate supports this pair, another round of rising expectations for yet another rate hike by the BoJ limits losses in the Japanese Yen. Investors are closely watching Japan’s bond yields, inflation trends, and global market volatility, as the BoJ’s tightening stance contrasts with the Federal Reserve’s cautious approach. Additionally, technical indicators suggest that USD/JPY remains vulnerable below the key resistance zone of 152.50-152.45, making further downside movement a possibility. KEY LOOKOUTS • Investors anticipate another Bank of Japan interest rate hike, driven by rising inflation and real wage growth, supporting the Japanese Yen. • Renewed fears of U.S. trade tariffs on steel and aluminum imports may pressure Japan’s economy, potentially impacting the Yen’s strength. • A strong U.S. Dollar, supported by upbeat job data and Federal Reserve’s cautious stance, influences the USD/JPY pair’s price movement. • The USD/JPY pair faces strong resistance at this confluence zone, with a potential downside move if the pair fails to sustain above it. The Japanese Yen faces a complex trading environment as investors weigh the impact of potential U.S. trade tariffs, a strong U.S. Dollar, and expectations of further tightening by the Bank of Japan (BoJ). While hawkish BoJ sentiment and rising Japanese bond yields offer support to the Yen, concerns over Trump’s protectionist policies and their inflationary effects continue to pressure the currency. The Federal Reserve’s cautious stance, coupled with strong U.S. job data, further strengthens the Dollar, keeping the USD/JPY pair volatile. Meanwhile, technical indicators suggest that the pair remains vulnerable below the key resistance zone of 152.50-152.45, with potential downside risks if selling pressure intensifies. The Japanese Yen remains under pressure amid renewed U.S. trade tariff concerns and a strong U.S. Dollar, despite growing expectations of a BoJ rate hike. While rising Japanese bond yields offer some support, technical indicators suggest USD/JPY remains vulnerable below the 152.50-152.45 resistance zone, with potential downside risks. • Investors expect the Bank of Japan to raise interest rates again, supporting the Yen and narrowing the U.S.-Japan rate differential. • Renewed fears of U.S. trade tariffs on steel and aluminum imports add pressure on Japan’s economy and the Yen. • Strong U.S. job data and the Federal Reserve’s cautious stance provide a lift to the U.S. Dollar, impacting USD/JPY movement. • Higher Japanese Government Bond (JGB) yields support the Yen, limiting deeper losses despite global economic concerns. • USD/JPY faces strong resistance at this key confluence zone, making further gains uncertain. • The IMF points out spillover risks for BoJ rate hikes, which include increased costs of debt servicing and financial pressure on corporates. • The USD/JPY pair continues to trade in a volatile range due to uncertainty over U.S. trade policies, global inflation trends, and central bank decisions. The Japanese Yen remains on the back foot as renewed fears over potential U.S. trade tariffs and a strong U.S. Dollar take a toll on its performance. Former President Donald Trump’s proposal to impose additional tariffs on steel and aluminum imports raises fears of economic strain on Japan, adding to the Yen’s weakness. Meanwhile, the Federal Reserve’s cautious approach to interest rates, coupled with strong U.S. job data, continues to support the Dollar, keeping the USD/JPY pair elevated. Expectations of another rate hike by the Bank of Japan (BoJ) have also helped limit deeper losses for the Yen, as the widening JGB yields close the interest rate gap between the US and Japan. USD/JPY Daily Price Chart TradingView Prepared by ELLYANA The USD/JPY pair faces technical resistance around the 152.50-152.45 confluence zone, suggesting that further upside may be capped short of strong buying momentum. The International Monetary Fund (IMF) has also warned Japan to remain vigilant about potential financial risks stemming from BoJ’s tightening measures, including rising government debt costs and corporate financial stress. Additionally, Japan’s inflation-adjusted real wages have shown steady growth, reinforcing the case for further monetary tightening by the BoJ. With ongoing global market volatility and uncertainty around U.S. trade policies, the Yen’s movement remains highly sensitive to economic and geopolitical developments. TECHNICAL ANALYSIS USD/JPY pair remains vulnerable below the key resistance zone of 152.50-152.45, which includes the 100-day and 200-day Simple Moving Averages (SMAs). Indicators on the daily chart remain in negative territory, signaling a bearish bias, though not yet in the oversold zone. If the pair fails to sustain above this resistance level, fresh selling pressure could push prices lower towards the 151.25 support, followed by the critical 151.00-150.95 zone. A decisive break below this area could open the door for further declines towards the 150.50 psychological level and 149.60 horizontal support. However, a sustained move above 152.50 may trigger short-covering, allowing the pair to reclaim the 153.00 level, with further upside potential depending on market sentiment and fundamental catalysts. FORECAST The USD/JPY pair could see an upward movement if the U.S. Dollar remains strong, driven by positive economic data and the Federal Reserve’s cautious stance on rate cuts. A sustained break above the 152.50-152.45 resistance zone could trigger fresh buying interest, allowing the pair to reclaim the 153.00 psychological level. If bullish momentum persists, the next upside target would be 153.50, followed by the 154.00 mark. Further gains could be supported by renewed concerns over Japan’s economic outlook, particularly if the Bank of Japan takes a slower approach to monetary tightening. Any increase in global risk tone may also keep pushing investors toward the U.S. Dollar, as a haven, and subsequently lift USD/JPY more. On the downside, this pair has found some critical supports at 151.25 now, followed by the 151.00-150.95 zone. It can easily head down from that area, touching the next destination at 150.50; that is again a psychological target. If selling pressure intensifies, USD/JPY could extend its decline towards 149.60 and potentially test the December swing low near 148.65. Factors that

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Currencies USD/JPY

Japanese Yen’s Tug of War: BoJ Rate Hike Bets vs. USD Strength Amid Geopolitical Uncertainty

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  • January 31, 2025
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The Japanese Yen is in a tug-of-war between bullish and bearish camps, as expectations of more rate hikes by the Bank of Japan (BoJ) clash with the strength of the US Dollar (USD). Latest statistics showing increasing inflation and strong industrial production in Japan will also give further justification to further monetary tightening, which makes the Yen resistant. However, geopolitical tensions are still in the limelight: rising tensions at the Sea of Japan and continued US trade policy uncertainties, making market sentiment very fragile. Low price action for the USD and anticipation of the US PCE Price Index report will cap further gains in the USD/JPY pair. While technical indicators suggest downside risks toward the 153.00 level, a breakout above the 155.00 mark could trigger a short-covering rally, potentially shifting the near-term bias in favor of the bulls. KEY LOOKOUTS • Rising Tokyo CPI and robust economic data fuel expectations of further BoJ tightening, supporting the Yen against excessive depreciation. • Russian military activity near Japan and uncertainties in US trade policies could raise safe-haven demand for the JPY, influencing its short-term movement. • Watch out for this preferred inflation gauge of the Fed, as it may dictate further strength in USD strength and next move in USD/JPY. • A break below 153.00 could confirm further downside, and sustained strength above 155.00 might encourage a bullish breakout in USD/JPY. The trajectory of the Japanese Yen continues to be shaped by a mix of domestic economic indicators, global geopolitical developments, and US monetary policy expectations. The strength in Tokyo CPI and robust industrial growth enhance the probability of further Bank of Japan (BoJ) rate hikes, which should continue to underpin the JPY. Geopolitical risks, however, such as Russian military activities near Japan and trade tensions between the US, add layers of uncertainty, potentially boosting safe-haven demand. All eyes are on the US PCE Price Index, which is an important indicator for Federal Reserve policy direction, and may influence USD strength and subsequently USD/JPY movements. From a technical perspective, a breakdown below 153.00 could trigger further losses for the pair, while sustained momentum above the 155.00 level may fuel a bullish rally. The Japanese Yen remains under pressure despite expectations of further BoJ rate hikes, supported by rising inflation and strong economic data. Geopolitical tensions and US trade policies add uncertainty, while the upcoming US PCE inflation data could influence USD/JPY movements. A break below 153.00 may signal further downside, while sustained gains above 155.00 could trigger a bullish rally. • Higher Tokyo CPI and robust industrial growth feed into speculation that the Bank of Japan may continue to tighten monetary policy, supporting the Yen. • Russian military move closer to Japan and US trade policies introduce uncertainty which could increase safe havens for JPY. • The Federal Reserve’s favorite inflation measure remains in focus for its effects on USD strength and the movement of USD/JPY. • The latest US GDP data showed a decline in growth, which may influence Fed policy and overall market sentiment. • A drop below 153.00 could signal further losses, while a sustained move above 155.00 may trigger a bullish breakout. • US President Donald Trump’s threats of higher tariffs on Mexico, Canada, and BRICS nations could impact global markets and JPY’s safe-haven appeal. • Higher Treasury yields, which are fueled by inflation fears, are supportive for the USD. Expectations for Fed policy are critical going forward for USD/JPY. The Japanese Yen remains trapped in a gossamer balance between BoJ rate hike expectations and greater global economic forces. Recent data show a rise in Tokyo’s CPI and strong industrial production, hinting that the central bank of Japan will be on its course toward policy normalization. This boosts the Yen from excessive depreciation. However, there are geopolitical risks, such as Russian military activities near Japan, and trade tensions between the US and other nations, which leave market sentiment unsure. US President Donald Trump’s warnings of a potential hike in tariffs on Mexico, Canada, and BRICS could trigger volatility in the markets. The latter is likely to raise safe haven demand for JPY. USD/JPY Daily Chart TradingView Prepared by ELLYANA However, attention now turns to US Personal Consumption Expenditure Price Index that can be taken as the preferred measure of inflation at the Fed’s end and influence the USD strength. A stronger-than-expected reading should reinforce the hawkish Fed narrative, sending USD/JPY higher, and a softer reading should cap upside for the Dollar. Another issue is that the US economy also slowed in Q4, thus economic momentum-related concerns should begin to factor in market expectations as well. On the technical side, levels to watch are support near 153.00, where a collapse could speed losses, and resistance at 155.00, where a sustained move above could trigger a bullish breakout. TECHNICAL ANALYSIS USD/JPY now stands at a critical juncture that depicts both key support and resistance in dictating its next move. A protracted break below 153.00 could accelerate selling, which in turn would likely send the currency pair lower again to the range of 152.40 to 152.00. From there, possible support is a 100-day Simple Moving Average (SMA). If on the other hand, USD/JPY breaks above the strong resistance of 154.50 and through 155.00 psychological, which is considered quite a big milestone, it is likely to unlock a bullish run. Further upside may drive the pair towards 155.40-155.45, with a further extension to 156.00 and the weekly high of 156.25. Oscillators on the daily chart are gaining negative traction but remain outside the oversold zone, which suggests room for further correction unless strong buying momentum emerges. FORECAST USD/JPY remains intact if the pair manages to sustain above the 154.50 level, with the next major hurdle being the 155.00 psychological mark. A decisive breakout above this level may trigger fresh impetus for bulls, to attain further gains towards 155.40-155.45. Further buying pressure may take the pair up to about 156.00 and even attack the 156.25 weekly high. Freshly built strength of the

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Currencies USD/JPY

Japanese Yen on Edge: BoJ Policy Speculation Balances Risk-On Sentiment and Limited Downside

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  • January 22, 2025
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USD/JPY is on its edge as divergence in policy speculations between Bank of Japan (BoJ) and Federal Reserve (Fed) outweighs the modest losing downside. Still, the interest rate hike for the BoJ in its meeting next week leaves a stark divergence from the probability of Fed lowering interest rates into the latter end of this year, which somewhat caps the serious losses for JPY. The USD/JPY pair continues to show resilience, holding below the key psychological mark of 155.00, amid a broader risk-on sentiment reflected in positive equity markets. Traders are treading cautiously, awaiting clarity from the BoJ’s policy decision, which will likely shape the near-term trajectory of the JPY. Meanwhile, technical indicators suggest limited bearish momentum, with spot prices poised to test immediate resistance near 156.00 or potentially climb toward multi-month highs if buying pressure sustains. KEY LOOKOUTS • Anticipated BoJ rate hikes and Fed rate cuts fuel contrasting market expectations, influencing the USD/JPY pair’s movement and limiting the Japanese Yen’s downside. • USD/JPY traded in a stable manner below 155.00, and with oscillators demonstrating weak bearish traction, there is a rather cautious mood for traders as the market waits for some clear technical breaks. • Upbeat equity markets have also negatively impacted the Japanese Yen’s safe-haven status, thereby allowing tailwinds for the pair’s recovery to key resistance. • Traders are awaiting the much-awaited BoJ policy meet, with the outcome to heavily influence near-term Japanese Yen dynamics. The Japanese Yen remains subdued as traders navigate the contrasting policy outlooks of the Bank of Japan (BoJ) and the Federal Reserve (Fed). With the BoJ expected to hike interest rates in its upcoming meeting and the Fed anticipated to cut rates later this year, the policy divergence adds uncertainty to the USD/JPY pair’s trajectory. Positive sentiment in equity markets further undermines the Yen’s safe-haven appeal, supporting a modest recovery in the pair. However, traders remain cautious, awaiting the BoJ’s decision, which will significantly impact near-term movement. On the technical front, the USD/JPY shows resilience below the 155.00 psychological mark, while oscillators signal limited bearish momentum, suggesting a measured approach to the pair’s next moves. The Japanese Yen is still under pressure as the BoJ and Fed policy expectations are contrasting, with the BoJ’s expected rate hike supporting it. Risk-on sentiment undermines the Yen, and traders await the BoJ’s decision for clearer direction. • The anticipation of a rate hike by the Bank of Japan supports the Japanese Yen and limits its downside potential. • Divergent expectations of Fed rate cuts later this year create a contrasting dynamic influencing the USD/JPY pair. • Positive equity market trends weaken the safe-haven appeal of the Japanese Yen, supporting modest gains in USD/JPY. • USD/JPY holds firm below the 155.00 mark, with oscillators showing limited bearish momentum, signaling cautious market sentiment. • Key resistance for USD/JPY lies at the 156.00 mark, with potential for further gains toward multi-month highs if buying pressure sustains. • Market participants remain on the sidelines, awaiting the BoJ’s policy decision to determine the near-term trajectory of the Yen. • The outcome of the BoJ’s two-day meeting is expected to be pivotal, potentially reshaping market sentiment and influencing JPY movements. The Japanese Yen remains under pressure as markets navigate contrasting policy expectations between the Bank of Japan (BoJ) and the Federal Reserve (Fed). As widely expected, a rate hike is in store during the BoJ’s two-day policy meeting. Still, later in the year, the Fed could cut interest rates, providing an opposing outlook for the JPY’s downside. This contrast along with broader risk-on equity market sentiment goes against the safe haven appeal of the Yen and hence modestly supports the USD/JPY. However, traders remain cautious, awaiting the BoJ’s decision, which could play a pivotal role in shaping the near-term trajectory of the Japanese Yen. USD/JPY Daily Price Chart. Source: TradingView Prepared By ELLYANA USD/JPY pair has shown resilience, holding steady below the psychological 155.00 mark despite bearish pressure. Oscillators on the daily chart indicate limited negative momentum, suggesting that a sustained break below key support levels is necessary for further depreciation. Immediate resistance lies near the 156.00 level, with potential for gains toward multi-month highs if buying pressure continues. The outcome of the BoJ’s policy decision will be critical in determining whether the pair accelerates higher or reverses course toward key support levels. As traders adopt a wait-and-watch approach, the Japanese Yen’s movement remains highly sensitive to policy signals and market sentiment shifts. TECHNICAL ANALYSIS USD/JPY is showing some strength as it is still holding below the psychological level of 155.00 and at the bottom side of a long-term ascending channel. Indicators on the day chart indicate that there is not sufficient bearish momentum for a big decline, meaning a major drop would need a good breakdown and persistent trade below the support of the trend-channel. Some support could be met around 154.50-154.45 and further declines could reach as low as 154.00 round figure and the mid-153.00s. On the upside, the 156.00 level acts as a strong resistance, followed by the 156.25-156.60 range. A breakout above these levels could pave the way for further gains toward the 157.00 mark and beyond, with the multi-month peak near 159.00 serving as a longer-term target. The overall setup suggests cautious optimism for bullish traders while urging bears to wait for clearer signals of sustained weakness. FORECAST The USD/JPY pair holds potential for further gains if buying pressure sustains above key resistance levels. The immediate hurdle lies near the 156.00 mark, followed by the 156.25-156.60 region. A breakout above these levels could trigger a rally toward the 157.00 psychological mark. If bullish momentum strengthens, the pair may test the 157.25-157.30 zone and extend gains to the 157.60 level, eventually targeting the multi-month peak near the 159.00 mark. Positive sentiment driven by risk-on market conditions and expectations of a dovish Fed could bolster this upward trajectory. Downside risks remain limited as the USD/JPY pair exhibits resilience near the 155.00 mark. A sustained break below this

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Currencies USD/JPY

Japanese Yen Retreats: Key Factors Behind USD/JPY Stability Above Mid-155.00s

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  • January 21, 2025
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The Japanese Yen has retreated from its one-month high against the US Dollar after a modest recovery for the greenback and as positive equity market sentiment weighs on the safe haven currency. Nonetheless, the Japanese Yen’s downward trend seems somewhat capped as speculative anticipation of an increase in Bank of Japan’s interest rate has gained momentum going into the remainder of the week, with an 80% probability priced by the markets. US President Donald Trump’s tariff comments have rekindled inflationary worries and trade war jitters, further adding to global economic uncertainty. On the technical side, the USD/JPY remains firm above the mid-155.00s, with levels playing both supporting and resisting roles as traders wait for the BoJ’s closely watched policy meeting. This development, coupled with macroeconomic signals and geopolitical dynamics, will determine the near-term path of the currency pair. KEY LOOKOUTS • Markets are eagerly awaiting the announcement by the Bank of Japan for the rate hike that may go a long way in determining the trend of Japanese Yen and other world currencies. • A moderate USD rebound, fueled by trade-related comments and inflation concerns, will be an important driver to watch for in the direction of the USD/JPY pair. • The area of 155.00 is key support, while resistance is seen near 156.25-157.00, and these levels will help guide traders to potential breakouts or reversals in the USD/JPY pair. • The threat of tariffs from US President Donald Trump against Canada and Mexico could reignite trade tensions, which may affect market sentiment and add volatility to global currency markets. The Japanese Yen has pulled back after hitting a one-month high against the US Dollar, with a combination of factors driving the move, including a modest recovery in the Greenback and improved risk sentiment in equity markets. However, speculation of an imminent Bank of Japan (BoJ) rate hike, fueled by hawkish remarks from BoJ officials and rising inflationary pressure, has limited the JPY’s depreciation. Meanwhile, US President Donald Trump’s tariff remarks have revived trade war fears, adding a layer of uncertainty to global markets. Technical analysis suggests resilience in the USD/JPY pair above the 155.00 mark, while traders await the crucial BoJ policy decision and monitor key support and resistance levels to gauge the pair’s next move. The Japanese Yen retreated from a one-month high against the US Dollar as markets anticipate a potential Bank of Japan rate hike. Meanwhile, Trump’s tariff remarks add global trade uncertainty. Technical levels above 155.00 support USD/JPY stability ahead of the BoJ policy meeting. • The Japanese Yen pulled back after reaching a one-month high against the US Dollar amid a modest USD recovery and improved equity market sentiment. • Market places are pricing 80% chance of a hike in Bank of Japan rate amid hawkish comments from officials as also rising inflationary pressure in Japan • US President Donald Trump’s suggestions for placing 25% tariffs on Canada and Mexico sparked renewed fears of a trade war, and added to uncertainty facing global economic and currency markets. • A modest USD rebound from its two-week trough, driven by inflation concerns and trade policy expectations, was also a tailwind for USD/JPY. • The USD/JPY price remains supported close to the 155.00 mark, where resistance levels from 156.25-157.00 levels are influencing trading dynamics in the short term. • Tuesday’s trade lacked any key economic data from both Japan and the US as market focus stayed on central bank meetings as well as geo-political cues. • This is a crucial two-day BoJ policy meeting that is likely to decide the course of action for the Japanese Yen and world market sentiments. The Japanese Yen (JPY) retreated from its one-month high against the US Dollar (USD), primarily due to the combination of several market dynamics such as modest recovery in the Greenback and positive risk appetite in equity markets. However, the downside for the JPY remains limited due to rising expectations of a Bank of Japan (BoJ) rate hike, with markets pricing in an 80% probability. Hawkish comments from BoJ officials and increasing inflationary pressure in Japan have strengthened this narrative. Meanwhile, US President Donald Trump’s announcement of proposed tariffs on Canada and Mexico has reignited trade war fears, adding volatility to global markets and contributing to a cautious trading environment. USD/JPY Daily Price Chart. Source: TradingView, Prepared By ELLYANA On the technical front, the USD/JPY pair has displayed resilience above the 155.00 level, with support and resistance levels guiding market participants. Traders look at a resistance area at 156.25-157.00 for upward momentum. A further decline should bring the pair to the vicinity of the 154.50 support area. With scarce economic reports out this week, all the attention goes to a two-day BoJ policy meeting that will take a big toll on the short-term trend of the JPY. This meeting combined with geopolitical factors and changing US monetary policy expectations will most probably be decisive in determining the USD/JPY pair direction. TECHNICAL ANALYSIS The USD/JPY pair is holding strong around the 155.00 level, which has acted as an important support in a multi-month ascending trend channel. A break below here could take prices lower towards 154.50 intermediate support, possibly to 154.00 and 153.00 psychological support. Conversely, resistance remains around the 156.25 region and last night’s high at 156.60. Break above this latter level might provide a gateway for a run towards 157.00 with the next gain going towards the 157.25-157.30 area and the round figure of 158.00. Traders will look for a decisive breakdown through these levels to confirm the next directional move. FORECAST The USD/JPY currency pair may find a path towards resuming the bullish drive, should it be able to sustain trading above the critical resistance located at 156.25, targeting levels at 156.60 and then reaching the psychological mark of 157.00. Further, breaking out above 157.30 might lead the currency pair towards the 158.00 mark and potentially towards retesting the multi-month high in the 159.00 zone. This rally may be further supported by a stronger

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