- USD/JPY bears depending on central bank sentiments.
- USD/JPY is pressured below trendline resistance and bears eye 126.55.
- Bulls are looking for a correction to give bears a discount to 129.50
USD/JPY is pressured due to a number of impactful macro themes, including the Bank of Japan's recent pivot, the Federal Reserve's decreasingly hawkish sentiment and the US economic disinflationary data. At the time of writing, USD/JPY is trading at 128.00 ahead of the Bank of Japan decision and after last week's headlines (Wednesday). The US Consumer Price Index (last Thursday) helped to nail down the coffin for the pair also.
USD/JPY dropped away from a trendline resistance on Wednesday before the highly anticipated Consumer Price Index event on Thursday when a headline about the Bank of Japan, as reported by Japanese media Yomiuri, circulated the wires. The news signalled that the Japanese central bank is up for reviewing the side effects of massive monetary easing in the monetary policy meeting next week. “BoJ reviews due to skewed interest rates in markets even after last month's tweak in bond yield control policy,” adds Yomiuri per Reuters. As a consequence, the yen moved higher sharply vs. the greenback and broke 130 and reached 129.60 ahead of the US CPI data which spurred the price lower to 127.45.
Meanwhile, despite prospects of a Fed pivot, there are observers that are sceptical of the Federal Reserve. Analaysts at TD Securities argued that ''while the precious metal space is no longer in a selling mode, there continues to be correction risk as it is not all certain that inflation has been defeated and that the US central bank is ready to get less restrictive anytime soon.''
Analysts at Brown Brothers Harriman argued that ''core PCE has largely been in a 4.5-5.5% range since November 2021 and we think the Fed needs to see further improvement before even contemplating any sort of pivot.''
''WIRP suggests a 25 bp hike February 1 is fully priced in, with nearly 30% odds of a larger 50 bp move. Another 25 bp hike March 22 is fully priced in, while one last 25 bp hike in Q2 is nearly 45% priced in that would take the Fed Funds rate ceiling up to 5.25%. However, the swaps market continues to price in an easing cycle by year-end and we just don’t see that happening.''
USD/JPY technical analysis
The pair has since continued lower and eyes the 126.50s. However, the daily M-formation could hold up the bears and attract a bid towards the 129.50s beforehand.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD erases gains to trade near 1.1050 ahead of US NFP, Powell
EUR/USD has erased gains to trade neutral near 1.1050 in the European session on Friday. The US Dollar breathes a sigh of relief after the trade war and recession fears-led sell-off, weighing on the pair. Traders look to the US NFP report and Fed Chair Powell's speech for fresh directives.
GBP/USD returns to the red near 1.3050 as US NFP data looms
GBP/USD is under heavy selling pressure near 1.3050 in European trading on Friday. Traders resort to profit-taking on their US Dollar short positiions, adjusting ahead of the critical US Nonfarm Payrolls data and Fed Chair Powell speech.
Gold price sticks to negative bias around $3,100; bears seem non-committed ahead of US NFP report
Gold price meets with a fresh supply on Friday, though the downside potential seems limited. Trump’s tariffs-inspired risk-off mood might continue to act as a tailwind for the precious metal. Fed rate cut bets weigh on the USD and also contribute to limiting losses for the XAU/USD pair.
XRP finds new lifeline as Coinbase Derivatives eyes XRP futures on April 21
Ripple price reclaims the $2.00 support level and trades at $2.06 at the time of writing on Friday in the wake of a drawdown to $1.96 during Thursday’s session. Traders continue to exercise caution after Trump’s tariffs hit 100 countries, as per a CryptoQuant report.
Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.