Key Points:
- USDJPY reversed from a session high of 149.196, closing at 147.908, with a low of 147.576.
- The yen gained amid expectations of further BOJ tightening and strong domestic wage growth.
The Ninja (USDJPY) pulled back from a high of 149.196, slipping to 147.908 as traders reacted to hawkish signals from the Bank of Japan (BOJ). After a prolonged period of yen weakness, expectations of monetary tightening from the BOJ have fueled a resurgence in the Japanese currency.
BOJ Policy Shift Supports the Yen
Governor Kazuo Ueda reaffirmed the BOJ’s commitment to unwinding its balance sheet, reinforcing speculation that Japan could move further away from its ultra-loose monetary stance. With inflation expectations rising and labour unions securing record wage hikes, the case for an interest rate hike later this year has strengthened. Market participants are increasingly pricing in a 25 basis point increase to 0.75% by July.
USDJPY Faces Headwinds
The yen’s strength comes as the U.S. dollar struggles to maintain momentum. The U.S. Dollar Index (USDX) slipped to 103.57, a fresh five-month low, reflecting broader concerns over the Federal Reserve’s policy outlook and trade war risks.
Adding to pressure on USDJPY, U.S. President Donald Trump’s escalating tariff threats against the European Union have raised fears of disruptions to global trade, further bolstering the yen’s appeal as a safe-haven asset.
Technical Analysis
The USD/JPY pair is trading at 147.91, reflecting a -0.22% decline for the session. After peaking at 149.19, the price reversed, experiencing a steady downtrend. The moving averages (5, 10, 30) confirm the bearish sentiment, with the price trending below key levels. The MACD is in negative territory, indicating downward momentum, though a slight pickup in histogram bars suggests a potential near-term bounce.
Picture: USD/JPY retreats from 149.19 peak, testing key support at 147.57, as seen on the VT Markets app
Support lies at 147.57, and a break below this level could trigger a deeper move toward 147.00. On the upside, resistance is seen at 148.37, followed by 149.19. Market participants should monitor U.S. Treasury yields, Bank of Japan policy cues, and risk sentiment shifts, as these factors will influence USD/JPY movements.
With growing speculation over Japan’s tightening cycle and ongoing volatility in global markets, traders are bracing for further movement in USDJPY in the coming sessions.
