The Japanese Yen (JPY) struggled to sustain a recovery from a one-week low against the US Dollar (USD) during Tuesday’s Asian session. Lingering uncertainty over whether the Bank of Japan (BoJ) will raise interest rates at its upcoming December meeting tempered market optimism. Despite some support from a risk-off sentiment driven by geopolitical tensions and concerns over global trade wars, the JPY remained subdued.
BoJ Rate Hike Prospects Clouded by Mixed Signals
Recent remarks by BoJ Governor Kazuo Ueda hinted that the central bank might be approaching its next rate hike, bolstered by solid underlying inflation data. However, reports suggesting a potential delay in rate action, coupled with dovish comments from board member Toyoaki Nakamura advocating caution, have introduced uncertainty, limiting the Yen’s gains.
The JPY’s safe-haven appeal received some support from fears that US President-elect Donald Trump’s tariff plans could escalate global trade tensions and recent instability in the Middle East, where Syrian rebels forced President Bashar al-Assad to flee to Russia.
Fed Outlook and US Data in Focus
Market participants are also keeping an eye on the Federal Reserve, which is expected to announce a rate cut later this month. However, cautious commentary from Fed officials suggests the central bank may tread carefully amid inflationary risks tied to Trump’s policy agenda.
Meanwhile, investors await Wednesday’s release of the US Consumer Price Index (CPI) for November, a key data point likely to shape expectations for the Fed’s monetary policy and influence USD/JPY movement ahead of the Federal Open Market Committee (FOMC) and BoJ meetings next week.
Technical Analysis: USD/JPY Holds Key Levels
The USD/JPY pair trades in a narrow range, reflecting a lack of strong commitment from traders. On the upside, the pair faces significant resistance near the 151.75–152.00 region, which includes the 38.2% Fibonacci retracement of November’s pullback and the 200-day Simple Moving Average (SMA). Oscillators on the daily chart suggest recovery momentum, and a sustained move beyond 152.00 could open the door to further gains toward 152.70–152.75 and eventually the 153.70 region.
On the downside, the critical 151.00 mark provides near-term support, with additional defenses at the 150.60 level and the psychological barrier of 150.00. A decisive break below 149.50–149.45 could expose the 148.65 monthly low, aligned with the 100-day SMA, potentially signaling a bearish shift.
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