JPY sticks to intraday gains near weekly high against bearish USD
- The Japanese Yen draws support from BoJ rate hike bets and the global flight to safety.
- Trade jitters and escalating geopolitical tensions continue to benefit safe-haven assets.
- The divergent BoJ-Fed expectations also exert downward pressure on the USD/JPY pair.
The Japanese Yen (JPY) retains its positive bias through the Asian session on Thursday, which, along with subdued US Dollar (USD) price action, drags the USD/JPY pair back closer to the 148.00 mark, a fresh weekly. Investors seem convinced that the Bank of Japan (BoJ) will keep hiking interest rates as strong wage growth could boost consumer spending and contribute to rising inflation. This led to the recent sharp narrowing of the rate differential between Japan and other countries, which continues to underpin the lower-yielding JPY.
Apart from this, persistent worries about US President Donald Trump’s trade policies and their impact on the global economy, and geopolitical risks turn out to be another factor benefiting the safe-haven JPY. Meanwhile, the prospects for further policy easing by the Federal Reserve (Fed) fail to assist the USD to register any meaningful recovery from a multi-month low. Moreover, the divergent BoJ-Fed policy outlooks contribute to the USD/JPY pair’s downfall and suggest that the path of least resistance or spot prices is to the downside.
Japanese Yen draws support from BoJ rate-hike bets, geopolitical risk and trade tensions
- The Bank of Japan decided to keep its key policy rate steady at the end of a two-day review meeting on Wednesday and noted that the uncertainty surrounding Japan’s economy, and prices remains high.
- In the post-meeting presser, BoJ Governor Kazuo Ueda said that the central bank wants to conduct policies before it is too late and that achieving a 2% inflation target is important for long-term credibility.
- The Federal Reserve, as was widely anticipated, also held interest rates steady for the second meeting in a row and signaled that it is likely to deliver two 25 basis points rate cuts by the end of this year.
- Meanwhile, policymakers trimmed their growth forecast for the year amid the growing uncertainty over the impact of US President Donald Trump’s aggressive trade policies on economic activity.
- Furthermore, the Fed gave a bump higher to its inflation projection. Traders, however, still see over a 65% chance that the US central bank would resume its rate-cutting cycle at the June policy meeting.
- Ukrainian President Volodymyr Zelenskiy and Trump agreed to work together to end the Russia-Ukraine war. Russian President Vladimir Putin, however, rejected a proposed full 30-day ceasefire.
- The Israeli military said that it launched a limited ground incursion into Gaza, a day after an aerial bombardment of the strip that shattered the two-month-old ceasefire with Hamas.
- Israeli Prime Minister Benjamin Netanyahu warned of fierce war expansion, raising the risk of a further escalation of Middle East tensions and benefiting safe-haven assets, including the Japanese Yen.
USD/JPY could accelerate the downfall once the 147.75 immedaite support is broken decisively
From a technical perspective, the overnight failure to find acceptance above the 150.00 psychological mark and the subsequent decline suggests that the recent bounce from a multi-month low has run out of steam. Moreover, negative oscillators on the daily chart support prospects for a further depreciating move for the USD/JPY pair. Hence, some follow-through weakness below the 148.00 mark, towards the next relevant support near the 147.75 horizontal support, looks like a distinct possibility. The downward trajectory could extend further towards the 147.30 region en route to the 147.00 round figure and the 146.55-146.50 area, or the lowest level since early October touched earlier this month.
On the flip side, any attempted recovery might now confront an immediate hurdle near the Asian session high, just ahead of the 149.00 mark. This is followed by the 149.25-149.30 supply zone, above which the USD/JPY pair could aim to reclaim the 150.00 mark. Some follow-through buying beyond the overnight swing high, around the 150.15 region, could prompt a short-covering rally and lift spot prices to the 150.60 intermediate barrier en route to the 151.00 mark and the monthly peak, around the 151.30 region.
US Dollar PRICE This month
The table below shows the percentage change of US Dollar (USD) against listed major currencies this month. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -4.60% | -3.03% | -0.89% | -0.82% | -1.64% | -2.75% | -2.56% | |
| EUR | 4.60% | 1.65% | 3.90% | 3.96% | 3.10% | 1.94% | 2.14% | |
| GBP | 3.03% | -1.65% | 2.18% | 2.27% | 1.42% | 0.29% | 0.48% | |
| JPY | 0.89% | -3.90% | -2.18% | 0.07% | -0.76% | -1.89% | -1.68% | |
| CAD | 0.82% | -3.96% | -2.27% | -0.07% | -0.83% | -1.93% | -1.75% | |
| AUD | 1.64% | -3.10% | -1.42% | 0.76% | 0.83% | -1.12% | -0.93% | |
| NZD | 2.75% | -1.94% | -0.29% | 1.89% | 1.93% | 1.12% | 0.20% | |
| CHF | 2.56% | -2.14% | -0.48% | 1.68% | 1.75% | 0.93% | -0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
