- The USD/JPY inverts currency flows as the Yen rises and the greenback steps down.
- The BoJ could be on track to reverse negative rates, sending JPY back up the charts.
- USD traders will be looking towards US CPI figures on Wednesday.
The USD/JPY saw declines in one of the worst-closing trading days since July, finishing Monday near 146.50 after opening the new trading week on the high side near 147.85. The Japanese Yen (JPY) is seeing fresh bidding in the market on the back of bullish comments from the Bank of Japan (BoJ), and the Greenback (USD) is sliding across the board as profit-taking from the recent bull run saps momentum for the US Dollar.
Yen gaining ground on BoJ hints of future rate policy reversal
Weekend comments from the BoJ’s Governor Kazuo Ueda hinted that the Japanese central bank is inching closer to reversing its negative rate policy. In an interview with the Yomiuri Shimbun newspaper on the weekend, BoJ Governor Ueda expressed that the end of the year could see a shift in negative rates from the Japanese central bank, as long as data supports the view that the BoJ is on track to achieve their 2% annual inflation target.
Markets seized upon the statements, sending the Yen to fresh highs across the board in anticipation of the beginning of a long-awaited rate hike cycle from the BoJ. On the US Dollar side, Greenback traders are taking a step back ahead of key US inflation figures due in the midweek.
US Consumer Price Index (CPI) figures are due on Wednesday, with market forecasts calling for the headline CPI to print at 0.5% MoM, an uptick from the previous period’s 0.2%. Core CPI numbers are expected to hold steady at 0.2%, and deviations in inflation figures could see rapid changes in the market’s USD bias to close out the trading week.
USD/JPY technical outlook
The Dollar-Yen pairing swooned below the 146.00 handle in early Monday trading, recovering to 147.00 before settling at the midpoint near 146.50. Last week saw the pair knocking on the ceiling just above 147.80, but fresh JPY bidding coupled with the USD step back has taken the pair off the highs, and a technical recovery will need to first gather steam from the resistance-turned-support barrier near 146.40.
A new rising trendline on daily candles will see dynamic support if current consolidation continues, and bulls will be looking for an upshot from US CPI data on Wednesday.
USD/JPY daily chart
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 retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.