The Japanese Yen remains under pressure with intraday losses, bears lack conviction amid hawkish BoJ expectations
FUNDAMENTAL OVERVIEW:
- The Japanese Yen softened following remarks from Finance Minister Katsunobu Kato on Friday.
- However, a strong National CPI reading reinforced expectations of a Bank of Japan rate hike, helping to curb losses.
- Additionally, prevailing bearish sentiment surrounding the US Dollar further restricted gains in the USD/JPY pair.
The Japanese Yen (JPY) remains under pressure during the early European session but lacks strong bearish momentum, as expectations for further Bank of Japan (BoJ) rate hikes persist. This outlook was reinforced by Japan’s stronger National Consumer Price Index (CPI) data released earlier on Friday, supporting elevated Japanese government bond (JGB) yields. The narrowing rate differential between Japan and other economies provides a tailwind for the lower-yielding JPY.
Remarks from Japan’s Finance Minister Katsunobu Kato and BoJ Governor Kazuo Ueda have sparked speculation about potential intervention in the bond market to curb rising JGB yields. This pressured the JPY on Friday, helping the USD/JPY pair rebound from the 149.30-149.25 region—its lowest level since early December. Traders now await global flash PMI releases and speeches from key FOMC members, which could influence the USD and drive market sentiment.
USD/JPY TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/JPY is trading within a down channel.
USD/JPY is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Selling Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 151.25
Immediate support level: 149.80
HOW TO TRADE USD/JPY
On the higher time frame, USD/JPY retreated from its recent high after facing rejection, leading to a sharp downside reversal and breaking the previous swing low. Currently, the pair is in a pullback phase, approaching a key resistance zone. If it faces rejection at this level, further declines toward the next critical support level could follow.