USD/JPY surges above 123.00 on firm US dollar despite BoJ Kuroda’s remarks

The USD/JPY advances for the third straight day, despite yen-related remarks by the Bank of Japan (BoJ) Governor Kuroda, who stated that “forex moves are somewhat rapid,” spurring a 30-pip drop in the pair, though recovered of late on broad US dollar strength. At the time of writing, the USD/JPY is trading at 123.58.

Also, a downbeat market sentiment keeps the greenback’s firm. European bourses closed mixed, while US equities fell, while the US yields and the greenback rose on Fed speaker remarks, hinting that the US central bank would hike rates and might begin reducing its balance sheet at the May meeting.

Additional to that, the Russian-Ukraine woes sum up investors’ dismal mood. Europe announced a new tranche of sanctions on Russia, led by German and France, who expelled Russian diplomats responding to Russian military atrocities in Bucha.

Meanwhile, the US and the G7 are coordinating new sanctions on Russia, expanding sanctions on financial institutions, state-owned companies in Russia, and unspecified Russian officials and their family members.

Fed policymakers dominate headlines

Earlier, Fed Governor Lael Brainard said that the Fed “is prepared to take stronger action if inflation and inflation expectations suggest the need to do so.” She added that the balance sheet might reduce its balance sheet in May.

On the same note, Kansas City Fed President Esther George (voter 2022) said that a 50 bps move would be an option, as conditions favor going faster than before. Later, San Francisco Fed President Mary Daly commented that the labor market is extremely tight and noted that the Fed is on a path to raising rates. Daly added that growth would slow but expected it to be a short-lived event.

USD/JPY Price Forecast: Technical outlook.

The USD/JPY keeps trending higher. However, it is worth noting that the Relative Strength Index (RSI) at 73.90 at overbought conditions reacted with less force to the upside on the rally towards current prices, meaning that the USD/JPY might be subject to a mean reversion move.

However, the uptrend remains intact unless the USD/JPY falls below 121.27. That said, the USD/JPY first resistance would be 124.00. A breach of the latte would expose solid supply zones, like 124.30, followed by the YTD high at 125.10.