USD/JPY holds steady above 143.00 mark, near its highest level since November 2022

USD/JPY is seen consolidating the overnight strong gains to a fresh YTD peak.
The Fed-BoJ policy divergence continues to weigh on the JPY and lends support.
Economic woes benefit the safe-haven JPY and cap gains, for the time being.

Haresh Menghani FXStreet

The USD/JPY pair oscillates in a narrow band, just above the 143.00 mark through the Asian session on Friday and consolidates the previous day's strong rally to a fresh high since November 2022.

The Japanese Yen (JPY) is undermined by a big divergence in the monetary policy stance adopted by the Bank of Japan (BoJ) and other major central banks, which, in turn, acts as a tailwind for the USD/JPY pair. It is worth recalling that the minutes of the April BoJ meeting released on Wednesday showed that the nine-member board saw the need to keep ultra-low interest rates to support the fragile domestic economy. Adding to this, BoJ policymaker Seiji Adachi brushed aside expectations of an early tweak in the yield curve control policy and said that it was too early to phase out ultra-loose monetary policy due to uncertainty over the price outlook.

In contrast, Federal Reserve (Fed) Chair Jerome Powell, during the second day of congressional testimony, backed the case for more interest rate hikes in the US, albeit at a "careful pace". Powell added that we don't see rate cuts happening any time soon and the Fed is going to wait until it is confident that inflation is moving down to the 2% target. This, in turn, assists the US Dollar (USD) to preserve the overnight recovery gains from its lowest level since May 11 and lends additional support to the USD/JPY pair. That said, slightly overbought conditions on the daily chart hold back traders from placing fresh bullish bets and capping the upside.

Furthermore, worries about economic headwinds stemming from rapidly rising borrowing costs weigh on investors' sentiment, which seems to benefit the safe-haven JPY and contributes to keeping a lid on further gains, at least for now. Nevertheless, the aforementioned fundamental backdrop seems tilted firmly in favour of bullish traders and suggests that the path of least resistance for the USD/JPY pair is to the upside. Hence, any intraday pullback might still be seen as a buying opportunity and remain limited. Market participants now look to the release of the flash US PMI prints for short-term trading opportunities on the last day of the week.

Technical levels to watch

USD/JPY

Overview
Today last price	143.09
Today Daily Change	-0.03
Today Daily Change %	-0.02
Today daily open	143.12

Trends
Daily SMA20	140.36
Daily SMA50	137.61
Daily SMA100	135.52
Daily SMA200	137.21

Levels
Previous Daily High	143.23
Previous Daily Low	141.61
Previous Weekly High	141.92
Previous Weekly Low	139.01
Previous Monthly High	140.93
Previous Monthly Low	133.5
Daily Fibonacci 38.2%	142.61
Daily Fibonacci 61.8%	142.23
Daily Pivot Point S1	142.08
Daily Pivot Point S2	141.04
Daily Pivot Point S3	140.46
Daily Pivot Point R1	143.69
Daily Pivot Point R2	144.27
Daily Pivot Point R3	145.31

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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