Japanese Yen Weakens As Perky Dollar Looks To Fed Guidance

Japanese Yen (USD/JPY) Analysis and Charts

• USD/JPY has ticked up for a 2nd consecutive session
• However it remains confined to its wide trading range
• The Fed isn’t expected to move connected rates, but will it push backmost marketplace views of erstwhile it might?

Learn How to Trade USD/JPY pinch our Free Guide

The Japanese Yen is simply a small weaker against a United States Dollar benefitting from immoderate wide spot arsenic markets await nan Federal Reserve’s first interest-rate telephone of nan year.

That will beryllium coming up aft European markets upwind down connected Wednesday, astatine 1900 GMT. The US cardinal slope isn’t expected to change borrowing costs this clip around. However, nan markets still expect immoderate beautiful heavy reductions this year, and nan grade to which Fed commentary confirms that thesis is apt to beryllium nan main constituent of this Open Market Committee gathering for traders and economists alike.

One awesome interest is that there’s been plentifulness of economical information retired of nan world’s largest system lately which mightiness propose it’s not precisely crying retired for economical stimulus. Overall maturation information for 2023’s past 4th was overmuch stronger than expected. While that bid is unfastened to accusations of being a small historical now, January’s much up-to-date user assurance snapshot recovered consumers much upbeat than astatine immoderate clip since precocious 2021. The labour marketplace remains beautiful tight, too.

What this intends for nan near-term is that nan thought of a US liking complaint trim arsenic soon arsenic March looks much uncertain than it did. If nan Fed does thing to underline this view, causing expectations of action to beryllium pushed backmost further, nan Dollar could summation further.

The Japanese system is besides seeing immoderate jobs-market spot according to nan astir caller numbers. Enduring costs maturation is astir apt nan azygous cardinal facet aft ostentation astir apt to spot nan Bank of Japan tighten its ultra-loose monetary argumentation astatine agelong last. However, it has already declined to do truthful erstwhile successful 2024. While nan statement arsenic to erstwhile it mightiness will tally on, for now, waste and acquisition successful USD/JPY is each astir nan Fed.

USD/JPY Technical Analysis

USD/JPY Chart Compiled Using TradingView

There are immoderate clear similarities successful nan regular charts of some USD/JPY and GBP/USD, pinch some pairs establishing trading ranges adjacent to caller highs and bounded astatine their little edges by cardinal Fibonacci retracement levels.

In USD/JPY’s lawsuit that comes successful astatine 146.724, a support level which has held since mid-January. Resistance astatine nan band’s precocious limit is astatine 148.805, nan intraday apical of November 28. Dollar bulls will request to get a batch much comfortable supra nan 148 psychological guidance level than they person successful nan past mates of weeks. Whether aliases not that happens seems highly limited connected nan fundamentals.

IG’s sentiment information finds traders profoundly bearish connected USD/JPY astatine nan moment, to nan tune of 73% expecting falls. This mightiness good beryllium nan benignant of level that argues for a contrarian bullish play.

–By David Cottle for DailyFX