- The USD/JPY climbed 1.75% on Tuesday after a dovish showing from the BoJ.
- The Yen has tumbled back into record lows, with the USD/JPY twenty pips away from a 30-year record.
- Fed Wednesday, US NFP Friday to dominate the back half of the trading week.
The USD/JPY is inches away from setting a new three-decade high as the pair trades into 151.70 heading into the end of Tuesday trading after the Bank of Japan (BoJ) left the Yen (JPY) in the dust with a dovish showing.
It’s going to be a USD-forward showing for the latter half of the trading week, with the Federal Reserve’s (Fed) latest rate call due on Wednesday, with another US Non-Farm Payroll (NFP) Friday set to close out the action.
BoJ: Another disappointment for JPY bulls – TDS
After announcing a slight tweak to the BoJ’s yield curve control (YCC) scheme, BoJ Governor Kazuo Ueda struck a notably dovish tone, voicing concerns that inflation wouldn’t achieve the BoJ’s long-run targets “with certainty” and there’s still too much room until positive price cyclicality is seen.
Despite that, the BoJ still upgraded their inflation forecasts, and the Japanese central bank now sees Japan’s inflation at 2.8% for 2024 (previously 1.9%).
On the US side, the Fed is set to give their latest rate call on Wednesday, and though markets are broadly forecasting the Fed to stand pat on rates for this meeting, odds of one last rate hike for 2023 are rising, and investors will be keeping a close eye on FEd Chairman Jerome Powell’s ensuing speech after the rate announcement.
Further out, US NFP is set to cap off another trading week, and markets are expecting a decline in the headline figure from 336K to 180K, and another beat in jobs data would be just the spark needed to send the US Dollar spiraling even higher.
USD/JPY Technical Outlook
The Yen’s deflate on Tuesday has sent the USD/JPY surging, and the pair is resting some 20-odd pips from setting a fresh 30-year high beyond 151.94, a previous record ceiling set back in October of 2022.
With record bids crossing the pair, there’s little in the way of technical resistance keeping the pair lashed down. The Relative Strength Index (RSI) and Moving Average Convergence-Divergence (MACD) indicators have been pinned in overbought-to-neutral territory since August.
On the low side, the 50-day Simple Moving Average (SMA) is drifting upwards, acting as dynamic technical support from just north of the 148.00 handle.
USD/JPY Daily Chart
USD/JPY Technical Levels
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