CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

• USD/JPY extends its losing spell as the Japanese Yen strengthens on hawkish BoJ bets.
• The US Dollar weakens on firm expectations for the Fed reducing interest rates in June.
• Investors await the US NFP for fresh guidance.

The USD/JPY pair continues its losing spell for the fourth trading session on Friday. The asset falls vertically to 147.00 on firm expectations that the Bank of Japan (BoJ) will pivot to raising interest rates after keeping them in the negative territory for more than a decade.

S&P 500 futures are positive in the European session, indicating a higher risk appetite of the market participants. The 10-year US Treasury yields have dropped significantly to 4.07% as Federal Reserve (Fed) Chair Jerome Powell has recognized the need to dial back the restrictive monetary policy stance to prevent the economy from falling into a recession.

Market expectations for the BoJ exiting the ultra-dovish policy stance increase after a few policymakers said a positive wage cycle is in sight. This has convinced investors that steady wage growth would keep inflation above the 2% target. Investors hope that the BoJ will quit the expansionary policy stance itself in the March policy meeting.

Meanwhile, the US Dollar is under pressure Fed Powell said the central bank is not so far from gaining confidence that inflation will come down to 2%. The US Dollar Index (DXY) has continued its five-day losing spell to Friday and has refreshed its seven-week low at 102.70.

Going forward, the US Dollar will be guided by the US Nonfarm Payrolls (NFP) data for February, which will be published at 13:30 GMT. The Unemployment Rate is anticipated to remain unchanged at 3.7%. Economists have anticipated that the United States employers recruited 200K jobs, lower than the robust hiring of 353K in January. 

USD/JPY trades near fresh five-week lows below the 148.00 level. However, Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, does not expect the Japanese Yen (JPY) to continue strengthening. 

Yen unlikely to strengthen too much in the medium to long term

• USD/JPY recovers intraday losses ahead of US employment data on Friday.
• US Dollar gains ground on market sentiment around Fed rate cuts in June.
• US Nonfarm Payrolls could fall to 200K new jobs in February, lower than the previous figure of 353K.

USD/JPY trims some of its intraday losses on Friday on improved US Dollar (USD) amidst weaker US Treasury yields. Nonetheless, the pair remains in negative territory and continues the losing streak for the fourth successive day, trading around 147.90 during the European trading hours.

The weekly depreciation of the US Dollar against the Japanese Yen is around 1.50%, by the press time, which can be attributed to the positive sentiment surrounding expectations of the Federal Reserve (Fed) initiating a rate-cut cycle starting in June. The CME FedWatch Tool indicates a 56.7% probability of a 25 basis point rate cut in June. Additionally, Federal Reserve Chair Jerome Powell hinted at the possibility of interest rate cuts occurring sometime this year during his second day of testimony before the US Congress.

Additionally, Cleveland Fed President Loretta Mester spoke at the Virtual European Economics and Financial Center, stating apprehension regarding the potential persistence of inflation throughout the year. Mester mentioned that if economic conditions align with forecasts, there may be a probability of rate cuts later in 2024.

The Japanese Yen (JPY) experiences a boost in response to growing speculation that the Bank of Japan (BoJ) will depart from its ultra-loose monetary policy stance, thereby weakening the USD/JPY pair. BoJ Governor Kazuo Ueda mentioned that it is "fully possible to seek an exit from stimulus while striving to achieve the 2% inflation target."

BoJ Governor Ueda also stated that the extent of rate hikes would depend on the prevailing circumstances if negative rates are lifted. Furthermore, BoJ policy board member Junko Nakagawa highlighted that the likelihood of achieving the 2% inflation target sustainably is gradually improving.

In January, Japan's non-seasonally adjusted Current Account Surplus decreased to ¥438.2B, from the previous figure of ¥744.3B. However, the surplus exceeded expectations, reaching ¥330.4B. This outcome could potentially provide some support for the Japanese Yen. Meanwhile, traders are eagerly anticipating US employment data, which includes Average Hourly Earnings and Nonfarm Payrolls, to gain further insights into the economic situation in the United States.

• USD/JPY loses traction near 147.70 amid the softer USD and BoJ’s hawkish comments. 
• BOJ policymakers said the economy was moving towards its 2% target, raising the chance that BoJ will end its negative rate. 
• The US Nonfarm-Payrolls will be a closely watched event for traders. 

The USD/JPY pair drops to fresh five-week lows below the 148.00 mark during the early Asian trading hours on Friday. A weaker US Dollar (USD) and growing speculation that the Bank of Japan (BoJ) will exit from an ultra-loose monetary policy stance lift the Japanese Yen (JPY) and exert some selling pressure on the USD/JPY. At press time, the pair is trading at 147.70, down 0.26% on the day. 

The Bank of Japan's (BOJ) governor and board members said on Thursday the economy was moving towards the central bank's 2% inflation target, raising the possibility that the BOJ will end its negative interest rates for the first time since 2007. The hawkish comments from BoJ policymakers lift the JPY to a one-month high against the USD

On the other hand, Fed Chair Jerome Powell said the US central bank is "not far" from gaining enough confidence that inflation will reach its 2% target to begin lowering interest rates. The Fed Chair didn’t provide a precise timetable for rate cuts, as Fed officials want to see more evidence before considering cutting rates. 

Market participants will take more cues from the US February labor market report on Friday. The US Nonfarm-Payrolls is projected to see 200,000 jobs added to the US economy. The unemployment rate is estimated to hold steady at 3.7%, while Average Hourly Earnings are forecast to ease to 0.2% MoM versus 0.6% MoM in January. 

• USD/JPY falls vertically to 148.00 as hawkish BoJ bets strengthen the Japanese Yen outlook.
• BoJ Nakagawa said a positive cycle for wages and inflation seems now achievable.
• Higher expectations for Fed rate cuts in June have built downward pressure on the US Dollar.

The USD/JPY plummets to 148.00 in Thursday’s European session as expectations for the Bank of Japan (BoJ) lifting negative interest rates have escalated. Increased bets for the BoJ turning to policy normalization due to improved wage outlook have strengthened the Japanese Yen.

Japan’s administration and some BoJ policymakers admit they expect a positive wage cycle, which could keep inflation steadily above the 2% target. In the Asian session, BoJ board member Junko Nakagawa said, “Prospects for the economy to achieve a positive cycle of inflation and wages are in sight.”

On Wednesday, Jiji News Agency reported that some members of the Bank of Japan’s (BoJ) Monetary Policy Committee (MPC) would favor an exit from an ultra-loose monetary policy stance at the March policy meeting. Also, BoJ board member Hajime Takata said last week that the central bank’s goal of maintaining inflation above 2% on a sustainable basis is ‘finally in sight’.

On the contrary, BoJ Governor Kazuo Ueda believes that the central bank will not abandon its ultra-dovish policy stance until he is convinced that inflation will sustainably remain above 2%.

Meanwhile, weak US Dollar has also resulted in downward pressure on the USD/JPY pair. The US Dollar Index (DXY) hovers near a monthly low of around 103.20 as expectations for the Federal Reserve (Fed) reducing interest rates in the June policy meeting have increased. In the semi-annual report to Congress, Fed Chair Jerome Powell said, "It will likely be appropriate to begin dialing back policy restraint at some point this year."

Going forward, the US Dollar will dance to the tunes of the United States Nonfarm Payrolls (NFP) for February, which will be published on Friday. The economic data will provide fresh insights into the labor market conditions.

USD/JPY has fallen back below the 148.00 level. Economists at Société Générale analyze the pair’s outlook.

Yen shorts are finally being cut back for the BoJ meeting

• The USD/JPY has climbed back to near previous peaks above 150, could this be a sign it is topping?
• Indicators remain mostly ambivalent and price action relatively muted so it’s too early to say. 
• Rumors the BoJ may be about to raise interest rates have stimulated talk of a USD/JPY breakdown

The USD/JPY pair has been a broad, sweeping sideways trend since peaking in October 2022. Although higher lows have suggested an underlying bullish bias the pair has failed to surpass the 2022 highs, indicating an overall balanced market. 

Rumors that the Bank of Japan (BoJ) could be preparing to raise interest rates have reignited speculative interest in the Yen and led many to hail a renaissance in the currency. 

Japan’s negative interest rates have long made the Yen a popular funding currency for the carry trade. This is an operation in which investors borrow in a currency with a low interest rate, like the JPY, and use the relatively cheap loan to fund the purchase of a currency with a higher interest rate, such as the US Dollar (USD), pocketing the difference in rates as profit. Over time this has acted as a negative factor for JPY and driven the USD/JPY to new highs. 

US Dollar vs Swiss Franc: Weekly chart

From a technical perspective the pair overall remains in a sideways trend, with some bearish signs appearing on the horizon. 

As can be seen on the weekly chart above, after peaking at 150.84 last week, USD/JPY has entered the zone of previous major highs in the 151s – possibly a sign it is topping – however, there has so far been insufficient downside price action to definitively say it is rolling over. 

The lack of upside momentum, however, is a sign the uptrend could be waning. The Moving Average Convergence/Divergence (MACD) has shown much less progress higher during the 2024 rally compared to the 2023 rally, suggesting bulls are tired. Still, without a concomitant decline in price as well, the long-term technical conclusion is neutral. 

US Dollar vs Swiss Franc: Daily chart

The daily chart above shows more compelling evidence the pair could be about to move lower. The MACD has just given a sell signal after the blue MACD line crossed below the red signal line at the end of February. 

The indicator has reliably signaled the turning points in the medium-term sideways trend – both after the November 2023 highs and the January 2024 lows – so it is possible it may be correctly signaling the next move down. If so, the next downside target lower would be at around 148.00 where the 100 and 50-day Simple Moving Averages (SMA) are situated. 

US Dollar vs Swiss Franc: 4-hour chart

The 4-hour chart, used to assess the short-term trend, is showing the formation of a long sideways range since February 12. Whilst price is currently knocking at the floor of this range and risks a downside break, it is still too early to say this is the case for sure. 

The MACD is relatively low at the moment, suggesting strong downside momentum, however, it would require a break below the base of the range at 149.00, and the 200-4-hour SMA at the same level, to signal a breakdown was actually occurring. Until that happens the short-term trend remains neutral with the potential for a recovery back inside the range. 

If a clear breakout lower did materialize, however, it would suggest a decline to the next target at 148.00 which is equivalent to the height of the range extrapolated lower, and also sits at the confluence of MAs on the daily chart. 
 

USD/JPY is back in the 150.00 range. Economists at CIBC Capital Markets analyze the pair’s outlook.

USD strength could lead to a mildly hawkish BoJ

• USD/JPY drops sharply to 149.50 as bets in favor of BoJ lifting negative rate escalate.
• Improving outlook for Japan’s wage growth would keep inflation sustainably above 2%.
• Investors await Fed Powell’s testimony for fresh guidance on US interest rates.

The USD/JPY pair falls sharply to 149.50 in Wednesday’s London session. The asset come under pressure as the Japanese Yen strengthens after the Jiji News Agency reported that some members of Bank of Japan’s (BoJ) Monetary Policy Committee (MPC) would favor an exit from ultra-loose monetary policy stance at the March policy meeting.

Last week, BoJ board member Hajime Takata said that the central bank’s goal of maintaining inflation above 2% inflation on a sustainable basis is ‘finally in sight’.

The Japanese Yen is expected to broadly outperform if the BoJ lifts negative interest rates, which it has been maintaining from more than a decade as inflationary pressures were unable to sustainably remain above 2%. The reasoning behind inflation remaining below 2% has been vulnerable wage growth. The outlook for wage growth is improving, fanning discussions of quitting the expansionary policy stance. 

Meanwhile, the US Dollar weakens as market expectations for Federal Reserve (Fed) rate cuts in the June policy meeting escalate. The CME FedWatch tool shows that that traders see a little over 57% chance for a rate cut by 25 basis points (bps) in the June meeting. The chances for a rate cut were around 52% on Tuesday.

Going forward, the US Dollar will be guided by Fed Chair Jerome Powell’s testimony before Congress at 15:00 GMT. Fed Powell will provide fresh guidance on when the central bank will start reducing interest rates.

• USD/JPY retreats 0.30%, showing signs of consolidation after touching a weekly peak of 150.57.
• Technical analysis indicates potential pressure points with the Tenkan-Sen and February lows providing support.
• Upside momentum requires reclaiming 151.00, setting the stage for a possible advance toward yearly highs.

The USD/JPY lost traction during the mid-North American session, edged down 0.30%, and exchanged hands at 150.08 after reaching a weekly high of 150.57 on Monday.

USD/JPY Price Analysis: Technical outlook

From a daily chart perspective, the USD/JPY is trading sideways capped on the upside by the 151.00 figure, while on the downside is the Tenkan-Sen at 150.02. A breach of the latter will expose the confluence of the February 29 low and the Senkou Span A at 149.21, followed by the 149.00 mark. Further downside is seen at 148.39 at the Kijun Sen level, before testing 148.00.

On the flip side, if buyers regain the 151.00 figure, that could open the door to challenge the November 16 swing high at 151.38, ahead of last year’s high at 151.91. Above this level, look for 152.00.

USD/JPY Price Action – Daily Chart

• USD/JPY slumps to 150.00, hoping the BoJ will exit the dovish policy stance sooner.
• Japan’s Murai is optimist on a positive cycle of rising growth, improving wage outlook.
• Fed Powell is expected to maintain a hawkish narrative on interest rates.

The USD/JPY pair falls sharply to the psychological support of 150.00 in early American session on Tuesday as hopes of Bank of Japan (BoJ) quitting the decade-long expansionary policy stance have escalated.

In Tuesday's early European session, Japan’s Deputy Chief Cabinet Secretary Hideki Murai said that improving economic and wage prospects are visible.

The BoJ has been postponing its plans of exiting the dovish policy stance as policymakers were less convinced about wage growth being strong enough to keep inflation sustainably above the 2% target. Investors' confidence in the BoJ shifting to policy normalization is improving as the Japanese government is expecting a steady wage growth outlook,

Last week, BoJ board member Hajime Takata said that the central bank’s goal of maintaining inflation above 2% on a sustainable basis is ‘finally in sight.’

Meanwhile, the US Dollar Index (DXY) trades sideways around $103.90 ahead of the United States Institute of Supply Management (ISM) Services PMI for February, which will be published at 15:00 GMT. The Services PMI is forecasted to have dropped to 53.0 from 53.4 in January.

This week, the primary trigger for the US Dollar will be the Federal Reserve Chair Jerome Powell’s testimony before Congress on Wednesday. Fed Powell may reiterate that there is no urgency for rate cuts. The Fed is less likely to reduce interest rates before gaining confidence that inflation will sustainably return to the 2% target.

Is the Bank of Japan (BoJ) ready to act? Economists at Rabobank analyze Yen’s outlook ahead of the BoJ’s March meeting.

USD/JPY to edge lower into the BoJ’s March meeting 

• USD/JPY advances toward 151.00 as BoJ might postpone policy-normalization plans.
• BoJ Ueda wants to see more wage data before announcing victory over deflation.
• The US Dollar will be guided by Fed Powell’s testimony and employment data.

The USD/JPY pair marches toward a three-month high of 150.80 in the early New York session. The asset strengthens as the Japanese Yen comes under pressure after Bank of Japan (BoJ) Governor Kazuo Ueda cited concerns over exiting the dovish monetary policy stance.

BoJ Ueda stressed the need to scrutinize more wage growth data to confirm that it could keep inflation above the 2% target. Contrary to BoJ Ueda, BOJ board member Hajime Takata said last week that the central bank must consider overhauling its ultra-loose monetary policy, including an exit from negative interest rates and bond yield control, Reuters reported.

Meanwhile, the US Dollar remains on the backfoot as expectations for Federal Reserve (Fed) rate cuts in June remains firm. The US Dollar witnesses higher liquidity outflows when hopes for interest-rate normalization by the Fed deepen.

This week, investors will focus on Fed Chair Jerome Powell’s testimony before Congress, which is scheduled for Wednesday and Thursday. Market participants hope that Fed Powell will reiterate the need to keep interest rates unchanged in the range of 5.25%-5.50% until it gains confidence that inflation will return sustainably to the 2% target.

In addition to Fed Powell’s testimony, the United States Automatic Data Processing (ADP) Employment Change data for February will influence market expectations for the interest rate outlook. The consensus shows that US private employers hired 150K job seekers against 107K in January.

• USD/JPY extends its gains on BoJ uncertainty about monetary policy tightening.
• Japanese media reports that the government could officially declare an end to deflation.
• The US Dollar Index (DXY) remains in the negative territory despite improved US Treasury yields.

USD/JPY extends its gains for the second successive session, trading higher around 150.30 during the European session on Monday. The Japanese Yen (JPY) faced challenges following remarks by Bank of Japan (BoJ) Governor Kazuo Ueda on Friday, who cast doubt on the sustainability of Japanese inflation reaching the 2% target. With inflationary pressures diminishing rapidly, there's a possibility that the BoJ may postpone its plans for monetary policy tightening.

However, reports from Japan's Kyodo News agency indicate that the government is contemplating officially declaring an end to deflation, signaling a heightened possibility of policy tightening. A decision will be made after assessing the strength of the annual labor-management wage talks scheduled for March 13 and considering the outlook for price trends.

The US Dollar Index (DXY) remains steady around 103.80, as it looks for direction amid improved US Treasury yields. However, the USD faced pressure following a subdued February’s manufacturing figures from the United States (US).

The US ISM Manufacturing PMI dropped to 47.8 from 49.1, well below the market's expectation of 49.5. Additionally, the US Michigan Consumer Sentiment Index fell to 76.9 in February, missing the expected level of 79.6. Despite these concerning indicators, Federal Reserve (Fed) officials have not signaled immediate interest rate cuts, lending some support to the USD.

Investors closely monitor upcoming economic releases such as the ISM Services PMI, ADP Employment Change, and Nonfarm Payrolls for February to assess the overall US economic health and potential Fed policy decisions. Moreover, Federal Reserve Chair Jerome Powell’s speech will be observed on Wednesday and Thursday for further insights into the central bank's monetary policy stance.

• USD/JPY bounces back to 150.12, recovering after BoJ Governor's dovish comments trigger USD rally.
• Technical analysis suggests potential for further gains, with eyes on surpassing February highs.
• Key support and resistance levels outlined, with a close eye on 150.00 as a pivotal point for direction.

The USD/JPY stages a recovery after diving to a two-week low of 149.21, climbing above the 150.00 figure on Friday amidst dovish comments by the Bank of Japan (BoJ) Governor Kazuo Ueda during the Asian session. That favored the Greenback, which paired Thursday’s losses, and currently stands at 150.12, up by a modest 0.10%.

USD/JPY Price Analysis: Technical outlook

From a technical perspective, the USD/JPY resumed its uptrend, clearing the Tenkan-sen at 150.02, with buyers eyeing further gains past that level. The next cycle high would be the February 28 high at 150.85, before reaching 151.00. Upside risks emerge once surpassed, with the next supply zone seen at last year’s high of 151.91.

Conversely, if sellers achieve a daily close below 150.00, the next support emerges at the confluence of the February 29 low and Senkou span A at 149.21 before challenging 149.00. The Kijun-sen lies beneath that area, at 148.39.

USD/JPY Price Action – Daily Chart

USD/JPY extends rebound from Thursday’s low of 149.21. Economists at  Société Générale analyze the pair’s outlook.

A revisit of last year’s high near 152.00 is on the cards

• USD/JPY down 0.47%, reacting to BoJ's Takata hinting at possible exit from stimulus, stirring market speculation.
• Technical analysis highlights crucial support at 149.21, with potential rebound or further decline in focus.
• Breach below 149.21 could lead to further losses, targeting 148.31 and possibly extending to the 146.00 region.

The USD/JPY trades with losses below the Tenkan-Sen level of 150.03, following “hawkish” comments by a Bank of Japan (BoJ) member, Takata. He said the BoJ needs to consider taking a flexible response, including exiting from monetary policy stimulus, which investors perceived as a normalization of monetary policy. At the time of writing, the pair exchanged hands at 149.98, down 0.47%.

USD/JPY Price Analysis: Technical outlook

The daily chart shows the pair printed a low at around 149.21, at the Senkou Span A level, before resuming to the upside and thus remaining shy of the 150.00 figure. A breach of the latter will expose the Tenkan-Sen and a resumption of the ongoing uptrend towards the 151.00 mark.

Conversely, if the USD/JPY stays below the 150.00 mark and achieves a daily close below 149.21, look for a fall to the Kijun-Sen at 148.31, ahead of the 148.00 mark. If surpassed, the pair could aim toward the top of the Ichimoku Cloud (Kumo) at around 146.00-146.15.

USD/JPY Price Action – Daily Chart

The Japanese Yen (JPY) is the best performing major after the Bank of Japan (BoJ) board member Hajime Takata sent a strong signal for ending the negative interest rate policy. Economists at Scotiabank analyze USD/JPY outlook.

Spring start to monetary tightening from the BoJ to bolster prospects of a Q2 rally in the JPY

• USD/JPY loses ground on risk appetite ahead of US PCE data.
• JPY received upward support on hawkish remarks from BoJ’s Hajime Takata.
• The US Dollar experiences a decline despite the improvement in US Treasury yields.

USD/JPY tumbles to around 149.80 during the European session after Bank of Japan (BoJ) board member Hajime Takata's hawkish remarks on Thursday. Takata stressed the importance of the BoJ considering adaptable measures, including the potential exit from monetary stimulus.

However, Hajime Takata provided additional comments, stating a reluctance to pinpoint any specific policy action when mentioning 'nimble responses.' He clarified that there are no plans for consecutive interest rate hikes and emphasized the necessity for gradual steps given the mixed circumstances surrounding small firms. Various options are available when dismantling the yield curve control framework.

The US Dollar Index (DXY) depreciates on Thursday, maintaining its position around 103.80, while the 2-year and 10-year yields on US Treasury coupons stand at 4.65% and 4.28%, respectively, by the press time. The weakness in the USD/JPY pair may be attributed to an improved risk appetite ahead of the release of key US Personal Consumption Expenditures - Price Index data, which could potentially influence the Federal Reserve's monetary policy stance.

According to the CME FedWatch Tool, the likelihood of rate cuts in March stands at 3.0%, with probabilities of 19.3% and 52.6% in May and June, respectively. New York Federal Reserve (Fed) President John Williams stated on Wednesday that while there is still progress to be made in reaching the Fed's 2% inflation target, the possibility of interest rate cuts this year remains on the table, contingent upon incoming data.