Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
Japanese Yen Dips as JGBs Retreat from Bank of Japan Cap. Where to for USD/JPY?

Japanese Yen Dips as JGBs Retreat from Bank of Japan Cap. Where to for USD/JPY?

Daniel McCarthy, Strategist

Japanese Yen, USD/JPY, US Dollar, BoJ, China, Fed, FOMC - Talking Points

  • The Japanese Yen appears to have mixed messages for now
  • Chinese New Year on the re-opening could provide stimulus
  • The Fed are maintaining their message. Where will that send USDJPY?

JPY Forecast
JPY Forecast
Recommended by Daniel McCarthy
Get Your Free JPY Forecast
Get My Guide

The Japanese Yen slipped lower today despite December CPI data hitting forecasts of 4% year-on-year for both the headline and core measures. Other currency markets have taken a breather so far today with narrow trading ranges.

10-year Japanese Government Bond (JGB) yields nudged below 0.40% today, well under the Bank of Japan’s ceiling of 0.50% that was left unchanged at their meeting earlier this week.

The broader story of China re-opening continues to provide mixed messages for markets. While a pro-growth slant is being reflected by elevated industrial commodity prices, Wall Street finished their cash session lower.

Perhaps that reflected the hawkish comments from Federal Reserve Vice Chair Lael Brainard that rates will need to stay high for a long period of time. She is seen as one the less hawkish members of the Federal Open Market Committee (FOMC).

APAC equities are a sea of green today with Hong Kong’s Hang Seng index leading the charge higher, rallying over 1%. Futures are pointing toward an upbeat start to the North American session.

Treasury yields are up a couple of basis points across the curve and the 2s 10s inversion remains around -0.76%.

Crude oil has steadied after yesterday’s gains with the WTI futures contract near US$ 80.50 bbl and the Brent contract above US$ 86 bbl.

Looking ahead, after UK retail sales, Canada will also see retails sales data and the US will get home sales numbers. Chinese New Year will see many Asian markets closed on Monday.

The full economic calendar can be viewed here.

How to Trade USD/JPY
How to Trade USD/JPY
Recommended by Daniel McCarthy
How to Trade USD/JPY
Get My Guide

USD/JPY TECHNICAL ANALYSIS

USD/JPY remains within a descending trend channel after a week of consolidation.

It comes after a recent sell-off that broke below the lower band of the 21-day simple moving average (SMA) based Bollinger Band.

The sideways price action has unfolded after it closed back inside the band, and it might signal that the bearish run has paused and may open the possibility of a reversal.

Support could be at the previous lows of 127.46 and 126.36. On the topside, resistance might be at the breakpoints of 129.51, 130.40, 130.57 and the recent peak of 131.58.

The 21-day SMA currently coincides with a descending trend line at 131.20 and may also offer resistance.

image1.png

Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel via @DanMcCathyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES