- Recent gains by the Japanese yen have led to the week and month ending with gains, amid growing expectations that the Bank of Japan will continue to raise interest rates this year.
- The selling operations of the USD/JPY pair pushed it towards the support level of 153.80 before closing the week's trading stable around the level of 155.18, as the US dollar gained positive momentum in the forex markets at the end of trading amid Trump's official approval of customs tariffs on goods imported from China, Canada and Mexico.
Japanese Yen Performance Anticipates BoJ Policies
According to the forex market trading, the Japanese yen was in a good position against the rest of the other major currencies amid strong signals of the future tightening of the Japanese central bank's policies. In this regard, Deputy Governor of the Bank of Japan Ryozo Himino stated that the Japanese central bank plans to continue raising rates if the economy and inflation are in line with expectations. On the economic front, data released at the end of the week showed that core inflation in Tokyo accelerated to an 11-month high of 2.5% in January, reinforcing expectations for hawkish policy from the Bank of Japan.
In addition, Japanese retail sales exceeded expectations, industrial production rebounded, and the country's unemployment rate fell unexpectedly.
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Keep in mind that currency investors are waiting for new buying opportunities for the dollar against the Japanese yen, so be a good follower of the events of this important week
And this week, investors will closely analyse the summary of opinions from the last Bank of Japan meeting for insights into potential policy tightening this year.
US Dollar Will Be Affected by Trump's Conflict with Powell
After the US central bank kept interest rates unchanged. Amid expectations of a future dispute between Trump and Jerome Powell. In a decisive post on the Truth Social website, Trump attacked the Federal Reserve after the meeting. “Because Jay Powell and the Fed have failed to stop the problem they created with inflation, I will do so by unleashing American energy production, cutting regulation, rebalancing international trade, and re-igniting American manufacturing,” Trump wrote.
Meanwhile, it’s worth noting that Trump is not necessarily calling for lower interest rates and is proposing his own solutions independently of the Fed. This is a different approach from his first term and may be related to the recognition that inflation remains a risk. Other criticisms have been directed at the Fed. Trump continued by saying that “if the Fed had spent less time on diversity, equity, inclusion, gender ideology, ‘green’ energy, and fake climate change, inflation would never have been a problem.”
Overall, Trump has probably had more influence on these issues than on actual policy. While Powell claimed he had “not been in touch” with Trump, some reporters at the press conference asked him about some of the recent changes. As the BBC noted, “…the questions Powell faced about how the Fed would handle a new White House order to scrap its diversification programs – and why it had pulled out of a global group of central banks focused on the risks of climate change to the financial system – underscored the challenges he will face in keeping the bank above the political fray.”
USD/JPY Technical Analysis and Expectations Today:
According to the performance on the daily chart, as is clear the USD/JPY pair is in an uptrend breakout mode. Therefore, forex investors may be looking for new opportunities to buy the USD/JPY. Technically, we see that the most appropriate levels for buying the USD/JPY currently are around the support levels of 153.30 and 151.90 respectively. Furthermore, as we always recommend not taking risks, no matter how strong the trading opportunities are. On the other hand, and over the same period of time, the resistance of 156.70 will remain the most important for bulls to control, and thus prepare for the psychological resistance of 160.00 again.
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