The Japanese Yen (JPY) continues to experience pressure against the US Dollar (USD) as it remains near its lowest levels since 1990, a trend likely to persist as Japanese authorities maintain efforts to support the domestic currency. Despite this, a softer risk tone and a slight retreat of the USD from monthly peaks have limited the JPY’s losses.
The cautious stance of the Bank of Japan (BoJ) and uncertainty regarding future rate hikes contribute to the challenge of a significant appreciation of the JPY. Additionally, recent hawkish comments from Federal Reserve Governor Christopher Waller bolster the USD and the USD/JPY pair. Traders are cautious ahead of the US Personal Consumption Expenditures (PCE) Price Index release, which could impact the Fed‘s monetary policy trajectory.
US economic indicators such as the final Q4 GDP print, Weekly Initial Jobless Claims, and Pending Home Sales will also influence short-term trading opportunities. Despite potential market movements, the fundamental landscape favors further intraday gains for the USD/JPY pair.
In response to the yen’s weakening, Japan’s top currency diplomat Masato Kanda has hinted at potential steps to counter disorderly FX movements. Additionally, discussions among top monetary officials indicate readiness to intervene against speculative currency movements.
Despite S&P’s affirmation of Japan’s credit rating, the BoJ’s recent dovish tone suggests continued accommodative financial conditions, likely exerting downward pressure on the JPY. BoJ Board Member Tamura Naoki reiterated the bank’s commitment to appropriate monetary policy adjustments based on economic and financial developments.
Technical analysis suggests that while resistance near the 152.00 level may challenge upward movements, a breach could signal further bullish momentum. Conversely, support near 151.00 is expected to limit downward movement, with a break potentially leading to a deeper corrective decline.
In summary, a combination of central bank actions and economic data dynamics is expected to maintain pressure on the Japanese Yen, with short-term fluctuations influenced by market sentiment and fundamental indicators.
