- USD/JPY extends the rally around 156.55 in Wednesday’s early Asian session.
- Fed’s Powell said central bank will keep rates on hold for an extended period as inflation eases slower than expected.
- Japanese government will closely work with the BoJ on FX market and will take all possible measures if necessary.
The USD/JPY pair trades in positive territory for the fourth consecutive day near 156.55 on Wednesday during the early Asian session. The uptick of the pair is bolstered by the speculation that the Federal Reserve (Fed) might maintain rates higher for longer amid the elevated inflation. However, the fear that Japanese authorities could intervene in the foreign exchange markets might cap the upside of USD/JPY.
The Fed Chair Jerome Powell reiterated Tuesday that inflation is easing slower than expected, and the April PPI figure provided more justification to keep rates higher for longer. Nonetheless, Powell further stated that he does not expect the Fed to raise rates. The hawkish remarks from Fed officials might boost the US Dollar (USD) and create a tailwind for USD/JPY.
On Tuesday, the Bureau of Labor Statistics revealed that the US Producer Price Index (PPI) rose 2.2% YoY in April, compared to the 1.8% increase in March (revised from 2.1%) and matching the expectation. Meanwhile, the Core PPI, excluding volatile food and energy costs, jumped 2.4% YoY in the same period, compared to an increase of 2.1% in March. On a monthly basis, the PPI and the core PPI both rose 0.5% MoM in April.
Looking ahead, investors will focus on the US Consumer Price Index (CPI) and Retail Sales reports for April. These reports could offer insights into the timing of the Fed's initial rate adjustment.
On the JPY’s front, Finance Minister Shunichi Suzuki said on Tuesday that the Japanese government will closely work with the Bank of Japan (BoJ) on the foreign exchange (FX) market and will take all possible measures if necessary. The fear of further FX intervention from Japanese authorities might provide some support to the Japanese Yen (JPY) and cap the pair’s upside.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

EUR/USD tests daily lows near 1.0350 on NFP
The buying bias in the Greenback gathers extra pace on Friday after the US economy created fewer jobs than initially estimated in January, dragging EUR/USD to the area of new lows near 1.0350.

GBP/USD flirts with daily lows near 1.2420, Dollar picks up pace
The continuation of the rebound in the US Dollar motivates GBP/USD to accelerates its losses and revisit the 1.2420 area, or daily lows, following the release of US NFP in January.

Gold tests fresh lows near $2,860 after NFP
Gold prices trim their early advance on Friday, deflating to the vicinity of the $2,860 region per ounce troy following the publication of the US labour market report in January.

Key takeaways from the January Payrolls report
The January payrolls number was weaker than expected at 143k, vs a reading of 175k. However, to counteract the downside surprise in the NFP number, the unemployment rate fell to 4% from 4.1%, and average wage data jumped by 0.5% on the month, to 4.1%, the market had been looking for a decline to 3.8%.

Top Trumps: The global economy’s House of Cards
The year has barely started and we are learning the hard way what Donald Trump’s second term in office means for markets, analysts and global policymakers. It's like living through an episode of the political thriller, House of Cards.

The Best Brokers of the Year
SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.