The Japanese Yen maintains modest intraday gains against USD amid divergent BoJ-Fed bets
FUNDAMENTAL OVERVIEW:
- The Japanese Yen rebounds after hitting a three-week low against the USD earlier on Tuesday.
- Expectations of a hawkish BoJ support the currency, limiting USD/JPY gains amid muted USD demand.
- However, fading safe-haven appeal could restrain further upside for the Yen.
The Japanese Yen (JPY) maintains a positive bias in early European trading, driven by hawkish minutes from the Bank of Japan (BoJ), which revealed discussions among policymakers regarding the conditions for further interest rate hikes. Additionally, subdued price action in the US Dollar (USD) has pulled the USD/JPY pair away from its nearly three-week high of around 151.00, reached on Tuesday.
However, the overall risk-on sentiment—fuelled by optimism surrounding less disruptive US trade tariffs, potential progress in Russia-Ukraine peace talks, and China’s stimulus measures—acts as a limiting factor for the safe-haven JPY. Meanwhile, the Federal Reserve’s (Fed) projection of two 25-basis-point rate cuts in 2025 starkly contrasts with the BoJ’s hawkish stance, reinforcing the potential for further JPY appreciation.
However, market attention will stay firmly on the Federal Reserve’s preferred inflation measure—the US Personal Consumption Expenditure (PCE) Price Index—set for release on Friday, as it will shape expectations regarding the future trajectory of rate cuts.
USD/JPY TECHNICAL ANALYSIS CHART:
Technical Overview:
USDJPY is trading within an up channel.
USD/JPY is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 150.40
Immediate support level: 149.45
HOW TO TRADE USD/JPY
After pulling back, USD/JPY established support and rebounded, breaking through a resistance zone and trading above it. Currently, the pair is undergoing a retracement toward its support zone. If it holds above this level, further upside momentum could follow.