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.

GBP/USD weakens below 1.3450 as US-Iran uncertainty boosts safe-haven US Dollar

The GBP/USD pair loses ground to near 1.3425 during the early Asian session on Tuesday. Uncertainty surrounding US-Iran talks drives traders toward a safe-haven currency such as the US Dollar against the British Pound. All eyes will be on the US July jobs data, which is due later on Friday.

EUR/USD flatlines above 1.1500 as traders turn cautious ahead of US NFP data

The EUR/USD pair holds steady around 1.1505 during the early European trading hours. Markets remain cautious ahead of the crucial US July jobs report, which is due later this week. Eurozone inflation ticked up in July, bolstering the case for a rate hike from the European Central Bank. The headline Eurozone inflation rose to 2.9% YoY in July from 2.8% in June, in line with expectations.

Gold consolidates above $4,050 amid Fed hike bets and Iran uncertainty

Gold seesaws between tepid gains and minor losses during the Asian session as traders seem hesitant and opt to wait for further developments surrounding the Middle East crisis. The US Dollar struggles to build on the previous day's solid bounce from the lowest level since Mid-June and acts as a tailwind for the bullion. However, the uncertainty over US-Iran peace talks helps limit the downside for the buck.

Ripple and Stellar steady as derivatives data points to easing downside pressure

Ripple and Stellar show mixed price action, with XRP holding above the key $1 support zone while XLM faces rejection at $0.173. Meanwhile, improving derivatives metrics alongside fading bearish momentum suggest that the downside pressure may be easing for both altcoins. Derivatives data shows mild bullish sentiment among traders.

NFP week: What awaits Bitcoin and Gold

This is an NFP week as markets brace for the release of a large influx of job market statistics. The data rollout begins with the JOLTS Job Openings report on Tuesday, continues with the ADP Employment report on Wednesday and Jobless claims on Thursday, and finishes with the Nonfarm Payrolls report on Friday.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.