USD/JPY bears flirt with 131.00 on hawkish BOJ concerns, Fed Minutes, US NFP in focus

USD/JPY remains depressed near the multiday low even as market’s inaction probes bears.
Chatters surrounding BOJ’s upward revision to inflation forecasts favor bears.
US Dollar begins 2023 on a back foot after posting the biggest yearly gains since 2015.

Anil Panchal FXStreet

USD/JPY licks its wounds near 131.00 as bears try to keep the reins during Monday’s sluggish session, mainly due to the New Year holidays in multiple markets including Japan. Even so, the Yen pair stays pressured at the lowest levels since August 2022, poked in the last month, amid hawkish concerns surrounding the Bank of Japan (BOJ).

Late on Friday, Nikkei Asia quotes anonymous sources to mention that the BOJ is considering raising its inflation forecasts in January to show price growth close to its 2% target in fiscal 2023 and 2024. “The proposed changes would show the core consumer price index rising around 3% in fiscal 2022, between 1.6% and 2% in fiscal 2023, and nearly 2% in fiscal 2024,” added the news.

Given the hopes of a strong BOJ inflation forecast, coupled with the latest tweak in the Yield Curve Control (YCC) policy, not to forget the Japanese central bank’s multiple market interventions in the last few days, the USD/JPY bears have more to cheer.

On the other hand, downbeat US data and an absence of Fedspeak weighed on the US Dollar Index (DXY). That said, Chicago Purchasing Managers’ Index crossed the market consensus of 41.2 and the 37.2 previous readings to print the 44.9 figures for December. Even so, the activity gauge signaled contraction for the fourth consecutive month. It should be noted that the year-end consolidation also exerted downside pressure on the DXY amid the sluggish sessions.

Against this backdrop, Wall Street closed with losses while the US 10-year Treasury bond yields rose 4.5 basis points (bps) to 3.879%, which in turn tried to challenge the USD/JPY bears, but could not.

Moving on, a lack of major data/events and the New Year holidays may restrict the USD/JPY pair’s intraday moves. However, Wednesday’s Minutes of the latest Federal Open Market Committee (FOMC) meeting, as well as Friday’s December month employment numbers for the US, will be crucial for the pair traders to watch as the bears seem running out of steam late, mainly due to the BOJ policymakers’ defense of the easy-money policies.

Technical analysis

Unless crossing a downward-sloping resistance line from late October, around 133.55 by the press time, the USD/JPY pair is likely to remain on the bear’s radar.

USD/JPY

Overview
Today last price	131.03
Today Daily Change	-0.24
Today Daily Change %	-0.18
Today daily open	131.27

Trends
Daily SMA20	134.91
Daily SMA50	139.56
Daily SMA100	141.1
Daily SMA200	136.23

Levels
Previous Daily High	133.1
Previous Daily Low	130.78
Previous Weekly High	134.5
Previous Weekly Low	130.78
Previous Monthly High	138.18
Previous Monthly Low	130.57
Daily Fibonacci 38.2%	131.66
Daily Fibonacci 61.8%	132.21
Daily Pivot Point S1	130.34
Daily Pivot Point S2	129.4
Daily Pivot Point S3	128.02
Daily Pivot Point R1	132.65
Daily Pivot Point R2	134.03
Daily Pivot Point R3	134.97

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.