USD/JPY extends upside to 149.00 as focus shifts to BoJ, Fed policy


  • USD/JPY jumps to 148.80 on hopes that the BoJ will maintain its ultra-loose monetary policy stance on Tuesday.
  • The BoJ lacks a significant wage-price spiral to back an exit to negative interest rates.
  • Diminished Fed rate cut expectations keep the US Dollar strong near its three-week highs around 103.50.

The USD/JPY climbs to 148.80 in the late European session on Friday as the Japanese Yen weakens on expectations that the Bank of Japan (BoJ) will not end the expansionary policy stance in the meeting on Tuesday.

Plenty of fundamentals favor the BoJ quitting negative interest rates. BoJ’s favourite inflation measure, the Consumer Price Index (CPI), excl. fresh food has remained above the 2% target for a longer period. Meanwhile, Japan's biggest companies agreed with labor unions to raise wages by the highest level in 33 years, reported Reuters.

In addition, Japan's Finance Minister Shunichi Suzuki said early Friday that the economy is no longer in deflation and that the government will mobilize all policy steps available to continue the strong trend of wage hikes this year. However, investors hope the BoJ will not go for exiting the prolonged expansionary policy stance as a full-proof plan for the wage-price spiral remains absent.

Market participants will keenly focus on the BoJ’s press conference about when the central bank will scrap its negative interest rates and Yield Curve Control (YCC). Earlier, BoJ Governor Kazuo Ueda said policymakers will debate whether the outlook is bright enough to phase out the massive monetary stimulus.

Meanwhile, market sentiment remains cautious as stubborn United States inflation has dented expectations for the Federal Reserve (Fed) to reduce interest rates from the June meeting. Surprisingly stubborn US Producer Price Index (PPI) data for February is expected to allow Fed policymakers to argue to keep interest rates higher for a longer period.

The US Dollar Index (DXY) is holding near its three-week high of around 103.50. Ten-year US Treasury yields are extending their upside to 4.31%.

USD/JPY

Overview
Today last price 148.89
Today Daily Change 0.56
Today Daily Change % 0.38
Today daily open 148.33
 
Trends
Daily SMA20 149.46
Daily SMA50 148.34
Daily SMA100 147.54
Daily SMA200 146.35
 
Levels
Previous Daily High 148.36
Previous Daily Low 147.43
Previous Weekly High 150.57
Previous Weekly Low 146.48
Previous Monthly High 150.89
Previous Monthly Low 145.9
Daily Fibonacci 38.2% 148.01
Daily Fibonacci 61.8% 147.79
Daily Pivot Point S1 147.72
Daily Pivot Point S2 147.11
Daily Pivot Point S3 146.8
Daily Pivot Point R1 148.65
Daily Pivot Point R2 148.97
Daily Pivot Point R3 149.58

 

 

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