USD\/JPY rose on Wednesday after a recent Yen rally slowed, marking the Yen\u2019s best weekly performance since November 2024. Expectations for a Bank of Japan rate rise remain in place despite a miss in Japan\u2019s GDP data, while comments pointed to a possible April move and the IMF restated support for policy normalisation.<\/p>\n
Japan\u2019s National CPI data due on Thursday may affect the next move. A firm core reading may add to tightening expectations and support the Yen, while a softer figure may allow USD\/JPY to extend Wednesday\u2019s rebound.<\/p>\n
USD\/JPY started Wednesday near 153.00 and rose about 1%. The move formed a bullish daily candle, but the pair stalled below the 50-day EMA at 155.30.<\/p>\n
The 200-day EMA is near 152.60, leaving price between the two averages after a drop from the January high near 159.45. The Stochastic Oscillator is rising from oversold, suggesting weaker downside momentum.<\/p>\n
A break above 155.30 could open 156.00 and the mid-January range. Failure to clear 155.30 may bring 153.00 back into view, plus the 152.10 year-to-date low.<\/p>\n
The Yen is heavily traded and is influenced by Japan\u2019s economy, BoJ policy, yield gaps with US bonds, and risk tone. BoJ policy from 2013 to 2024 weakened the Yen, while policy changes in 2024 and rate cuts elsewhere have narrowed the 10-year US\u2013Japan yield gap.<\/p>\n
With USD\/JPY stalling below the 50-day moving average at 155.30, we see this as a critical decision point for the pair. The recent bounce from the 153.00 level seems to be losing steam, suggesting that the Yen’s underlying strength is still a major factor. The market is now in a transitional phase after the sharp drop we witnessed from the highs near 159.45 back in January.<\/p>\n
The Japanese National Core CPI data released today, showing a 2.2% year-over-year increase for January, came in just above market expectations. This figure reinforces the narrative that the Bank of Japan will proceed with a rate hike, with many now solidifying their bets for a move in April. This strengthens the case for a stronger Yen in the coming weeks.<\/p>\n
Given this inflation data, we should watch the 155.30 resistance level very closely. A failure to break above it would be a strong signal to consider buying JPY calls or USD\/JPY puts, targeting a retest of the 153.00 support level. This strategy aligns with the narrowing interest rate differential, especially as recent US jobless claims figures have ticked up, hinting at a cooling US economy.<\/p>\n
The policy shift we have been watching since the BoJ began unwinding its ultra-loose stance in 2024 continues to be the dominant theme. The multi-year trend of a widening US-Japan yield gap is reversing, providing a fundamental tailwind for the Yen. In this environment, any rally in USD\/JPY is likely to be met with selling pressure.<\/p>\n
However, we must also prepare for a potential relief rally, as suggested by some technical indicators. A decisive break and hold above 155.30 could open the door to the 156.00 area. For this scenario, short-term USD\/JPY call options could be used to capitalize on a short squeeze, but this should be viewed as the lower probability outcome.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/JPY rebounds as Yen rally fades; BoJ hike bets persist. CPI next; 155.30 resistance, 153 support.<\/p>\n","protected":false},"author":62,"featured_media":17045,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42238","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42238"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42238\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17045"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}