CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

• The Japanese Yen jumps to over a one-month top against the USD amid BoJ rate hike bets.
• Expectations for a further narrowing of the Japan-US rate differential also underpin the JPY. 
• A positive risk tone might cap the safe-haven JPY amid worries about Trump’s trade tariffs. 

The Japanese Yen (JPY) attracts fresh buyers after data released during the Asian session on Wednesday showed a rise in Japan's real wages, which reaffirms bets that the Bank of Japan (BoJ) will raise interest rates again. This marks a big divergence in comparison to expectations that the Federal Reserve (Fed) will lower borrowing costs twice by the end of this year. The resultant narrowing of the rate differential between Japan and the US further benefits the lower-yielding JPY.

Apart from this, a softer US Dollar (USD) dragged the USD/JPY pair to mid-153.0s, or its lowest level since December 18 in the last hour. Meanwhile, investors remain worried that Japan would also be an eventual target for US President Donald Trump's trade tariffs. This, along with the risk-on mood, might hold back traders from placing fresh bullish bets around the safe-haven JPY. Nevertheless, the fundamental backdrop supports prospects for further JPY appreciation. 

Japanese Yen strengthens as a rise in Japan’s real wages lifts BoJ rate hike bets

• Preliminary government data released earlier this Wednesday revealed that inflation-adjusted real wages in Japan climbed 0.6% from the year before in December. Adding to this, the previous month's reading was revised to show a 0.5% rise against a 0.3% drop reported originally. 
• Meanwhile, the consumer inflation rate that the government uses to calculate real wages accelerated from November's 3.4% to 4.2%, or the fastest pace since January 2023. This, in turn, supports prospects for further policy tightening by the Bank of Japan and lifts the Japanese Yen. 
• A survey compiled by S&P Global Market Intelligence showed that Japan's service activity expanded for a third straight month in January. In fact, the au Jibun Bank Service Purchasing Managers’ Index (PMI) rose from 50.9 to 53.0 in January, marking the highest level since September 2024. 
• The US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that the number of job openings on the last business day of December stood at 7.6 million. This was below the 8.09 million openings in November and expectations of 8 million.
• The data pointed to a slowdown in the job market, which could allow the Federal Reserve to cut rates further. This marks a big divergence in comparison to the hawkish BoJ expectations and drags the USD/JPY pair to over a one-month low during the Asian session on Wednesday. 
• Fed Vice Chairman Philip Jefferson said on Tuesday that there is no need to hurry further rate cuts as a strong economy makes caution appropriate. Interest rates are likely to fall over the medium term and the Fed faces uncertainty around government policy, Jefferson added further. 
• US President Donald Trump offered concessions to Canada and Mexico by delaying the 25% trade tariffs for 30 days. Adding to this hopes for a trade breakthrough between the US and China help to ease trade war fears and remain supportive of the prevalent risk-on environment. 
• Investors remain worried that Japan would also be an eventual target for Trump's trade tariffs. Japan's Prime Minister Shigeru Ishiba is set to meet with Trump later this week and their conversation may provide more hints about the risk as Japan has a large trade surplus with the US.
• Traders now look forward to the US economic docket – featuring the release of the ADP report on private-sector employment and the ISM Services PMI. The data provide some impetus to the US Dollar ahead of the closely-watched US Nonfarm Payrolls report on Friday. 

USD/JPY seems vulnerable to slide further; breakdown below the 154.00 mark in play

From a technical perspective, the intraday breakdown and acceptance below the 154.00 mark could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still away from being in the oversold territory. This, in turn, suggests that the path of least resistance for the USD/JPY pair is to the downside and supports prospects for a further depreciating move. Hence, a subsequent fall towards the 153.00 mark, en route to the 100-day Simple Moving Average (SMA), currently pegged near the 152.45 region, looks like a distinct possibility.

On the flip side, any attempted recovery might now confront immediate resistance near the 154.00 round figure. Some follow-through buying, however, might prompt a short-covering rally and lift the USD/JPY pair to the 154.70-154.75 intermediate hurdle en route to the 155.00 psychological mark. Meanwhile, a further move up could be seen as a selling opportunity and remain capped near the 155.25-155.30 region. The latter should act as a key pivotal point, which if cleared decisively will negate the negative outlook and shift the near-term bias in favor of bullish traders.

• USD/JPY faces continued pressure, potentially closing below 155.00 as US-China trade war escalates.
• Technical indicators suggest further downside, with pair now trading within the Ichimoku Cloud.
• Resistance and support levels closely watched, with potential rebounds facing hurdles at 155.76 and 156.29.

The USD/JPY drops below 155.00 for the second straight day and seems poised to achieve a daily close below the latter. Falling US Treasury yields and the escalation of the “trade war” between the United States (US) and China would underpin the Japanese Yen (JPY) due to its safe-haven appeal. At the time of writing, the pair posts losses of 0.28%.

USD/JPY Price Analysis: Technical outlook

Developments over the weekend developed a huge 190-pipe candle on February 3, which lately closed below 155.00 for the first time since January 30. Additionally, the USD/JPY pair cleared the 50-day Simple Moving Average (SMA) at 155.02 and registered back-to-back bearish close days, which could pave the way for further downside.

Of note is that the USD/JPY spot price lies inside the Ichimoku Cloud (Kumo), which indicates “sideways price action.”

If USD/JPY edged below the January 30 low of 153.79, this could open the door to challenge the Senkou Span B at 153.76, followed by the January 27 low of 153.71. If those levels are cleared, the next support would be the 200-day SMA at 152.81.

Conversely, if USD/JPY climbs above the 50-day SMA, the next resistance would be the Senkou Span A at 155.76, ahead of challenging the Tenkan-Sen at 156.29

USD/JPY Price Chart

• USD/JPY gains sharply above 155.00 as investors underpinned the US Dollar against the Japanese Yen in a risk-on market mood.
• US President Trump delayed a 25% tariff order on Canada and Mexico for 30 days.
• Investors await Japan PM Ishiba’s meeting with US Trump this week.

The USD/JPY pair climbs above 155.00 in Tuesday’s North American session. The asset strengthens as the safe-haven demand of the Japanese Yen (JPY) has diminished more than the US Dollar (USD). Investors dump the Yen as United States (US) President Donald Trump has deferred his orders to impose 25% tariffs on Canada and Mexico by 30 days.

President Trump announced an immediate suspension of his tariff orders after North American peers agreed to cooperate on restricting the flow of drugs and undocumented immigrants into their economy.

The scenario has resulted in a sharp decline in the appeal of safe-haven assets. Investors expect tariffs from President Trump to be more a tactic to get better deals against US trading partners than a source to fund tax cuts.

Going forward, the Yen will be influenced by the outcome of Prime Minister Shigeru Ishiba’s meeting with Trump later this week. Given Japan's large trade surplus with the US, investors will look for cues on how the nation will address tariff risks.

Meanwhile, the US Dollar (USD) gives up its intraday losses and turns slightly negative as the appeal of risk-perceived assets improves. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks lower to near Monday’s low of 108.40.

On the domestic front, investors await the US JOLTS Job Openings data for December, which will be published at 15:00 GMT. The number of Job Openings is expected to be 8 million, marginally lower than the 8.1 million in November.

US Dollar (USD) could continue to trade in an erratic manner, probably in a range of 154.50/156.00. In the longer run, for the time being, USD is likely to trade in a 153.70/156.70 range, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD is likely to trade in a 153.70/156.70 range

24-HOUR VIEW: “Our view for USD to rise above 156.00 yesterday was incorrect. USD rose to 155.88, plummeted to 154.00 before rebounding quickly to close at 154.75. It continues to rise in early Asian trade today. We are unable to derive much from the price movements. Today, USD could continue to trade in an erratic manner, probably in a range of 154.50/156.00.”

1-3 WEEKS VIEW: “We indicated yesterday that ‘while short-term upward momentum is building, it is premature to expect a sustained advance.’ We added, ‘the bias is tilted to the upside, but at this time, we view any advance as part of a higher trading range of 154.30/157.20.’ USD then fell below 154.30 before rebounding strongly from 154.00. The buildup in short-term momentum has eased. From here, we expect USD to trade in a broad range, probably between 153.70 and 156.70.”

• USD/JPY declines from highs of 155.86, settling at 154.51 amid tariff-induced volatility.
• ISM Manufacturing PMI rises, signaling robust business activity despite global trade fears.
• Bank of Japan maintains optimistic outlook, ready to navigate Trump’s protectionist policies.

The USD/JPY retreated from daily highs of 155.86 hit after US President Donald Trump advanced on its protectionist policies, enacting tariffs in Canada, Mexico, and China. Initially, the Greenback rose, but as fears faded, the pair dipped below its opening price by 0.44% and traded at 154.51.

Yen strengthens after initial drop as Trump's new tariffs unsettle markets

Market participants seem worried, as portrayed by global equities trading in the red. US President Trump applied 25% tariffs on Canada and Mexico and 10% to China. US-North American partners vowed retaliatory measures, while the latter, would challenge this policy at the World Trade Organization (WTO).

At the time of writing, the ISM Manufacturing PMI for January increased by 50.9, exceeding forecasts of 49.8. It was up from December 49.2, an indication of improvement in business activity. Digging deeper into the data, the sub-component of prices paid advanced from 52.5 to 54.9, while the employment index improved from 45.4 in December to 50.3.

In the meantime, during the Asian session, the Bank of Japan revealed its January meeting Summary of Opinions. Some of the members added that inflation expectations are heightening as prices rise above the 2% inflation target, and others said that hiking rates would be sufficiently neutral. Policymakers stated that Japan’s economy is resilient and can navigate through protectionist policies implemented by Trump.

This week, the US economic docket will feature Fed speakers, JOLTS Job Orders data, and Factory Orders on February 4. In Japan, the schedule is light with the Jibun Bank Services PMI final release for January.

USD/JPY Price Analysis: Technical outlook

The USD/JPY is forming a ‘bearish candle’ with a long upper shadow, an indication that the pair is not finding acceptance within the 154.78-155.88 range. This is bearish, as seen by price action, with the pair extending its downtrend inside the Ichimoku Cloud (Kumo). Sellers are eyeing the next support at Senkou Span B at 153.76.

On further weakness, the next support would be the 200-day Simple Moving Average (SMA) at 152.83

On the other hand, if buyers achieve a daily close above 155.00, look for further upside. Key resistance is found at the Senkow Span A at 155.76.

Upward momentum is beginning to build; US Dollar (USD) is likely to rise above 156.00 but is unlikely to reach 156.80. In the longer run, bias for USD is tilted to the upside; currently, any advance is likely part of a higher trading range of 154.30/157.20, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD/JPY fis likely to rise above 156.00

24-HOUR VIEW: "USD closed at 155.18 last Friday (+0.57%), but it rose sharply in early Asian trade today. Upward momentum is beginning to build, and USD is likely to rise above 156.00. The next major resistance at 156.80 is likely out of reach for now. On the downside, we expect any pullback to remain above 155.00 (minor support is at 155.40)."

1-3 WEEKS VIEW: "The pullback in USD to 153.70 in late January appears to have stabilized. While short-term upward momentum is building, it is premature to expect a sustained advance from here. That said, the bias is tilted to the upside, but at this time, we view any advance as part of a higher trading range of 154.30/157.20."

USD/JPY is holding above technical support at 154.00, BBH FX analysts note.  

BOJ policy rate likely to peak around 1.00%

"Bank of Japan (BOJ) Governor Ueda stuck to the bank’s guidance. Ueda noted that more hikes are in the pipeline if the economic and price outlooks are realized but cautioned that monetary policy will remain accommodative to support price trend."

"The comments suggest the BOJ policy rate will likely peak around 1.00% over the next two years, in line with market pricing. This seems about right as the BOJ expects inflation to stabilize around its 2% target in 2026. Bottom line: the BOJ shallow policy normalization cycle is an ongoing headwind for JPY."

• USD/JPY falls as US GDP growth slows to 2.3%, below expected 2.6%.
• Improved jobless claims fail to boost dollar amid prevailing economic concerns.
• Yen strengthens from policy divergence; Fed holds rates while BoJ maintains tighter stance.

The USD/JPY retreats in early trading during the North American session after economic data showed the US economy grew lower than expected a day after the Federal Reserve (Fed) decided to keep rates unchanged. The pair trades at 154.09, down 0.76%.

USD/JPY dropped below 154.00 amid weaker-than-expected US economic growth

Data from the United States (US) weighed on the Greenback, as Gross Domestic Product (GDP) for the last quarter of 2024 dipped from 3.1% to 2.3%, missing investors' estimates of 2.6%. At the same time, the US Department of Labor revealed that Jobless Claims for the week ending January 25 increased by 207K beneath forecasts of 220K and the previous week 223K.

After the data, the USD/JPY extended its losses toward 153.83, but buyers reclaimed the 154.00 figure.

The Japanese Yen extended its gains as there was a divergence between the Bank of Japan (BoJ) and the Fed, favoring the former's appreciation. Therefore, further USD/JPY downside is seen, as US GDP data could signal the economy may be decelerating at a faster pace.

This week, the Japanese economic docket will feature the Unemployment Rate, Industrial Production, and Retail Sales. In the US, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, and Fed speakers.

USD/JPY Price Forecast: Technical outlook

The USD/JPY has fallen inside the Ichimoku Cloud (Kumo), indicating that sellers are gathering momentum after clearing the 50-day Simple Moving Average (SMA) at 154.97. The Relative Strength Index (RSI) is bearish. Therefore, bears could be confident that they are in charge.

For a continuation they need to exit the Kumo, clearing the Senkou Span B at 153.76. Once done, sellers could drive the USD/JPY towards the 200-day SMA at 152.85 ahead of the 100-day SMA at 152.22.

The JPY has extended its better tone today, reinforcing its position as the best performing G10 currency on a 1 day, 5 day and month-to-date view, Rabobank's FX analyst Jane Foley notes.

JPY extends its better tone today

"This morning’s move took USD/JPY back below 155.00.  So far this month, the currency pair has struggled to hold breaks of this level, with price action running into support at the upper boundary of the Ichimoku cloud."

"On the back of remarks from Deputy BoJ Governor Himino this morning, JPY bulls appear to be more confident about the resolve of policymakers to hike rates in 2025. That said, currently market implied policy rates suggest only 29 bps of policy tightening is priced in on a 1-year view. We maintain our year end forecast of USD/JPY145.00."

"We favour selling USD/JPY into rallies. A break below the Ichimoku cloud around USD/JPY 153.35 would be a bearish signal."

• USD/JPY falls sharply to near 154.30 amid strong performance by the Japanese Yen across the board.
• Bloating BoJ hawkish bets have increased the Yen’s appeal.
• The Fed kept its borrowing rates steady in the range of 4.25%-4.50% on Wednesday.

The USD/JPY pair slumps to near 154.30 in Thursday’s European session. The asset weakens as the Japanese Yen (JPY) performs strongly across the board amid growing expectations that the Bank of Japan (BoJ) will continue hiking interest rates this year.

Dovish BoJ bets have accelerated on assumption that Japan's spring wage negotiations will result in strong hikes again this year. On Thursday, BoJ Deputy Governor Ryozo Himino also said that the central bank “will raise rates if economy and prices move in line with forecast”.

Meanwhile, the US Dollar (USD) trades sideways after the Federal Reserve’s (Fed) first monetary policy decision of the year in which it left interest rates unchanged in the range of 4.25%-4.50%, as expected. Fed Chair Jerome Powell guided that the central bank will resume the policy-easing cycle only when it sees some progress in disinflation towards the central bank’s target of 2% or some weakness in the labor market.

In Thursday’s session, investors will focus on the United States (US) Q4 Gross Domestic Product (GDP) data, which will be published at 13:30 GMT. On an annualized basis, the US economy is expected to have grown at a slower pace of 2.6%, compared to 3.1% growth seen in the third quarter of 2024.

USD/JPY trades below the upward-sloping trendline around 155.00, which is plotted from the September 13 low of 139.58 on a daily timeframe. The outlook of the asset has weakened as it trades below the 20- and 50-day Exponential Moving Averages (EMAs), which hovers around 155.90 and 155.10, respectively.

The 14-day Relative Strength Index (RSI) slides to near 40.00. A fresh bearish momentum would trigger if the RSI breaks below 40.00.

USD/JPY could see building of significant offers on a downside move below the January 27 low of 153.70, which would decline to near December 12 high of 151.80, followed by the December 11 low of 151.00.

On the contrary, an upside move above the January 23 high of 156.75 would drive the pair towards the January 15 high of 158.08 and the January 10 high of 158.88.

USD/JPY daily chart

• Fed keeps fed funds rate steady, cites resilient labor market and balanced economic risks.
• US Treasury yields and Dollar Index gain modestly due to Fed's slightly hawkish inflation stance.
• Market participants await Fed Chair Powell's press conference for further directional guidance.

The USD/JPY remained unfazed during the North American session after the US Federal Reserve (Fed) maintained the fed funds rate at the 4.25%—4.50% range while shifting slightly hawkish after acknowledging there's no inflation improvement. At the time of writing, the pair trades at around 155.31, down 0.12%.

USD/JPY drops, even though Fed's remove inflation language

The Federal Reserve's monetary policy statement highlighted a resilient labor market while maintaining that risks to its dual mandate goals "are roughly in balance." Policymakers noted solid economic expansion and reiterated their commitment to monitoring risks while continuing balance sheet reduction at the existing pace. The decision was unanimous.  

Following the announcement, U.S. Treasury yields climbed, with the 10-year note rising four and a half basis points to 4.581%. The U.S. Dollar Index (DXY) gained 0.17%, reaching a session high of 108.10.

Meanwhile, USD/JPY traders will eye Fed Chair Jerome Powell's press conference at around 18:30 GMT.

USD/JPY Reaction to Fed's Decision

The USD/JPY ticked higher towards the 100-hour Simple Moving Average (SMA) at 155.44. If surpassed, it could pave the way to test the 200-hour SMA at 155.71. Further upside is seen, as 156.00 would emerge as the next resistance. 

Conversely, if USD/JPY drops inside the Ichimoku Cloud (Kumo) below 155.20, a test of 155.00 is on the cards. On further weakness, the pair could challenge the January 25 daily low of 154.09.

• USD/JPY trades subduedly around 155.40 ahead of the Fed’s monetary policy announcement.
• The Fed is widely anticipated to leave interest rates steady in the range of 4.25%-4.50%.
• Investors have underpinned Yen against the US Dollar as BoJ's hawkish bets swell.

The USD/JPY pair edges lower to near 155.40 in Wednesday’s North American session. The asset trades cautiously even though the US Dollar (USD) performs strongly ahead of the Federal Reserve’s (Fed) monetary policy decision at 19:00 GMT.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes three-day high near 108.30. The USD Index gains as traders are confident that the Fed will announce a pause in the policy-expansionary spell and keep interest rates steady in the range of 4.25%-4.50%. In the last three policy meetings, the Fed reduced its key borrowing rates by 100 basis points (bps).

As the Fed is certain to maintain the status quo, investors will pay close attention to Fed Chair Jerome Powell’s press conference to gauge the next move in the US Dollar. Powell can be asked how long the Fed will keep interest rates at their current levels. Investors will also be keen to know the impact of United States (US) President Donald Trump’s economic agenda on the monetary policy outlook.

Analysts at Macquarie expect Powell to offer little in this regard other than emphasizing the “data dependence of future decisions” and highlighting “uncertainty about the neutral rate.”

Market participants view Trump’s policies, such as immigration controls, higher tariffs, and lower taxes, as inflationary and pro-growth for the economy. This scenario forces Fed officials to adopt a hawkish stance on interest rates.

Though the US Dollar performs strongly, investors have underpinned the Japanese Yen (JPY) against the Greenback amid growing expectations that the Bank of Japan (BoJ) will raise interest rates again this year.

BoJ hawkish bets swell after minutes of the December meeting showed that officials emphasized the need to adjust the monetary policy cautiously in hopes that Japan's spring wage negotiations will result in strong hikes again this year.

The minutes of the Bank of Japan (BOJ) December meeting are outdated following last week’s 25bps policy rate hike to 0.50%, BBH FX strategists report.

BOJ policy rate to peak around 1.00%

“In December, the BOJ left the policy rate unchanged at 0.25% and the minutes showed the board discussed how high to raise the policy rate in the future. One member cautioned the BOJ ‘would need to slow the pace of policy interest rate hikes’ once the policy interest rate approached the neutral interest rate.”

“BOJ staff estimates the nominal neutral rate to be in a range of 1.00% to 2.50%. Markets continues to imply the BOJ policy rate to peak around 1.00% over the next two years. This seems about right as the BOJ expects inflation to stabilize around its 2% target in 2026. Bottom line: the BOJ shallow policy normalization cycle is an ongoing headwind for JPY.”

• USD/JPY dives sharply to near 154.00 as the Japanese Yen performs strongly on safe-haven demand.
• The BoJ hikes interest rates by 25 bps but didn’t provide a specific interest rate hike path.
• The US Dollar declines as Trump reverses the 25% tariff proposal on Columbia and an acceleration in Fed dovish bets.

The USD/JPY pair plunges to near 154.00 in Monday’s North American session. The asset weakens as the Japanese Yen (JPY) outperforms its major peers, with investors rushing to safe-haven fleet amid a sharp sell-off in United States (US) technology stocks.

US technology stocks plunged after analysts predicted that DeepSeek’s Artificial Intelligence (AI) model of China performs on par with top chatbots like OpenAI at affordable costs. Apart from the Japanese Yen, the Swiss Franc (CHF) is also performing strongly, being a safe-haven asset.

The Yen is also trading strongly on the back of an interest rate hike decision by the Bank of Japan (BoJ). The central bank raised its borrowing rates by 25 basis points (bps) to 0.5% on Friday amid confidence that sustained wage growth would keep inflationary pressures above the desired rate of 2%. The BoJ refrained from committing a pre-defined policy-restrictive path but said that they would raise interest rates further if the economy continued to perform in line with their expectations.

On early Monday, the US Dollar (USD) also performed strongly on multiple tailwinds such as US President Donald Trump’s threat to impose 25% tariffs on Columbia for refusing to accept military flights carrying illegal immigrants from their nation and the uncertainty ahead of Federal Reserve’s (Fed) monetary policy meeting on January 28-29, but surrenders its entire gains and resumed its downside journey towards the seven-week low.

Later, Trump dialed back his proposal of placing tariffs on Columbia as the South American nation accepted his terms, which diminished the USD’s safe haven. On the monetary policy front, an acceleration in Fed dovish bets also weighed on the US Dollar.

Traders now expect the Fed to cut interest rates by 50 bps this year, but it is widely anticipated to keep interest rates steady in the range of 4.25%-4.50% on Wednesday.

USD/JPY was a touch softer, tracking UST yields lower while BoJ MPC (last Friday) hinted at continued policy normalization. Pair was last seen at 154.05, OCBC's FX analysts Frances Cheung and Christopher Wong note.

USD/JPY to trend lower for now

"Japanese economic data supports BoJ policy normalization. Wage growth pressure remains intact, alongside broadening services inflation. Tokyo core CPI, PPI, wages rose while labor market report also pointed to upward wage pressure with jobless rate easing, while trade unions are calling for another 5-6% wage increase at shunto wage negotiations for 2025."

"We still look for USD/JPY to trend lower, premised on Fed cut cycle while the BoJ has room to further pursue policy normalization. Bearish momentum intact while RSI fell. Consolidation likely with risks skewed to the downside. Support at 152.80 (200 DMA). Resistance at 156.90 (21 DMA), 158.80 (recent high)."

• USD/JPY recovers sharply to near 156.50 as Japanese Yen underperforms its major peers.
• The BoJ refrained from providing a specific policy-tightening path.
• US President Trump has pushed back fears of imposing tariffs on China.

The USD/JPY recovers Bank of Japan’s (BoJ) interest rate hike-inspired losses and rises to near 156.60 in Friday’s North American session. The Japanese Yen (JPY) has turned upside down in the aftermath of the BoJ’s monetary policy announcement.

The initial reaction from the Yen was very bullish after the BoJ raised its key borrowing rates by 25 basis points (bps) to 0.5%, as expected. However, it dived later. Only one policymaker, Toyoaki Nakamura, dissented to the decision to tighten the monetary policy further. The sell-off in the Yen came after BoJ Governor Kazuo Ueda’s press conference in which he refrained from committing a pre-defined policy-tightening path.

“We don't have any preset idea and the central bank will make a decision at each policy meeting by looking at economic and price developments as well as risks,” Ueda said.

When asked about the impact of United States (US) President Donald Trump’s tariff policies on BoJ’s monetary policy stance, Ueda said, “There's very high uncertainty on the scale of tariffs. Once there is more clarity, we will take that into our forecasts and reflect them in deciding policy."

Though investors have underpinned the US Dollar (USD) against the Yen, it is underperforming its other peers as its risk-premium has diminished significantly. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to 107.45, the lowest level seen in over a month.

USD’s risk premium has been diminished as Trump has dialed back expectations of tariffs on China. In an interview with Fox News on Thursday, Trump said that he could reach a deal with China without raising tariffs.

USD/JPY recently formed a lower peak near 158.85 than the one achieved last year at 162, Societe Genrale’s FX experts note.

USD/JPY can fall down to 154.30/153.75 and below

“Daily MACD has been posting negative divergence highlighting receding upward momentum. The pair is now challenging the confluence of the 50-DMA and a multi-month ascending trend line. It will be interesting to see if the pair attempts a rebound from this MA. Failure to overcome the high achieved earlier this week near 156.75 could denote risk of a deeper pullback.”

“Next potential supports could be located at 154.30/153.75, the 50% retracement from December and 152.80.”

• USD/JPY retreats from six-day high as U.S. Initial Jobless Claims suggest labor market cooling.
• Bank of Japan meeting likely to see 25 basis point rate hike, contrasting with Fed's steady stance.
• Global markets await Trump's Davos comments, with trade policy rhetoric set to influence currencies.

The USD/JPY slides during the North American session after hitting a six-day high of 156.75, as labor market data revealed in the United States (US) came worse than expected. At the time of writing, the pair trades at 156.28, down 0.19%.

Japanese Yen appreciates ahead BoJ’s policy decision

The US Department of Labor revealed that Initial Jobless Claims for the week ended January 18 increased, to 223K, exceeding forecasts of 220K. Labor market strength and rising inflation figures had prompted the Federal Reserve from continuing to easing policy, alongside uncertainty regarding the new fiscal policy applied by the Trump administration.

Even though the Fed is expected to keep rates unchanged at the next week’s meeting, the Bank of Japan (BoJ) most likely raise rates by 25 basis points (bps), which would be the highest since 2007 at the January 23-24 meeting.  Several senior BoJ officials expressed confidence on wage growth momentum.

In the meantime, the lack of economic data in the US and Japan would keep traders eyeing the US President Donald Trump appearance at the Davos World Economic Form (WEF). His trade policy rhetoric has sent waves across global financial makers,

USD/JPY Price Forecast: Technical outlook

The USD/JPY has found stir resistance at the 157.00 figure with bulls unable to crack it since sliding below the latter on January 15. Momentum seems to favor sellers, as spot prices lie beneath the confluence of the Tenkan and Kijun-sen at the 156.64-156.48 range, which if broken, could pave the way for further downside. The next key support will be the January 22 low of 155.33, followed by January 21 swing low of 154.75.

• USD/JPY ticks lower as the US Dollar trades subduedly, with investors looking for cues about the likely full-fledged Trump tariff plan.
• Investors expect the Fed to leave interest rates unchanged on Wednesday.
• The BoJ is anticipated to announce its third interest rate hike decision.

The USD/JPY pair ticks lower to near 156.30 in Thursday’s European session. The asset faces slight pressure as the US Dollar (USD) trades subduedly as investors seek clarity over the tariff plan by United States (US) President Donald Trump. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower but holds the key support of 108.00.

Donald Trump has not yet released a full-fledged tariff plan, while investors anticipated that he will unveil the tariff hike structure for all economies right on his first day of administration. In first three days of Trump administration, he has threatened 25% tariffs on Canada and Mexico and 10% on China, which will come into effect on February 1.

Going forward, investors should brace for significant volatility in the US Dollar as the Federal Reserve (Fed) is going to announce its first monetary policy decision of the year on Wednesday. The Fed is certain to announce a pause in the policy-easing spell, according to the CME FedWatch tool. Therefore, investors will pay more attention to the Fed’s interest rate guidance and the likely impact of Trump’s economic policies on the economy and monetary policy.

But before that, investors will focus on the flash US S&P Global Purchasing Managers’ Index (PMI) data for December, which will be released on Friday.

In the Asia-Pacific side, investors await the Bank of Japan’s (BoJ) monetary policy announcement on Friday. The BoJ is expected to raise interest rates. This would be the third interest rate hike by the BoJ of the current policy-tightening cycle. BoJ hawkish bets accelerated after some officials, including Governor Kazuo Ueda, commented that rate hikes would be discussed in the January meeting. “The central bank is currently analyzing data thoroughly and will compile the findings in the quarterly outlook report, and based on that, the bank will discuss whether to raise interest rates at next week's policy meeting,” Ueda said.