Daily Forex News and Watchlist: USD/JPY

Remarks from BOJ official Uchida sparked a rally for USD/JPY today.

Can the pair sustain its rally past this range resistance?

Before moving on, ICYMI, yesterday’s watchlist looked at NZD/JPY pulling back after a strong NZ jobs report. Be sure to check out if it’s still a good play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. EIA crude oil inventories rose by larger than expected 5.5 million barrels vs. projected build of 1.7 million barrels and earlier increase of 1.2 million barrels

FOMC member Kugler: “At some point, the continued cooling of inflation and labor markets may make it appropriate to reduce the target range for the federal funds rate.”

FOMC member Barkin favors patient approach when it comes to timing of rate cuts, suggests that recent uptick in inflation may be “head fake” in that a rebound in prices is due soon

U.K. RICS house price balance showed that 18% of surveyors reported price declines in their area in January vs. estimated 22% figure, hinting that housing market is heating up on lower interest rates

Chinese headline CPI slowed from 0.3% y/y drop to 0.8% slump vs. estimated 0.5% decline in January

Chinese PPI showed a 2.5% y/y fall in producer prices in January vs. expected 2.6% decline and earlier 2.7% drop

Japanese Economy Watchers sentiment index fell from 50.7 to 50.2 vs. projected 50.3 figure in January

Price Action News

Overlay of JPY vs. Major Currencies Chart by TradingView

Overlay of JPY vs. Major Currencies Chart by TradingView

Commodity currencies were on shaky ground earlier today, after China’s headline CPI figures came short of estimates. The year-over-year reading dropped further from a 0.3% decline in December 2023 to a 0.8% slump in January while the annual PPI climbed a couple of notches from -2.7% to -2.5%.

However, the bigger mover for the session was the Japanese yen, which underwent a sharp decline upon hearing remarks from BOJ official Uchida.

He said that he’s not expecting their ultra-easy monetary policy to change significantly, reminding that the central bank won’t aggressively hike interest rates even if they exit negative territory. He also downplayed the potential impact of ending their bond-buying operations and reminded that they’d like to keep monetary policy as stable as possible.

Upcoming Potential Catalysts on the Economic Calendar:

U.S. initial jobless claims at 1:30 pm GMT
FOMC member Barkin’s speech at 1:30 pm and 5:05 pm GMT
BOE official Mann’s speech at 3:00 pm GMT
RBA Governor Bullock’s speech at 10:30 am GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action!  ️

USD/JPY 15-min Forex Chart by TradingView

USD/JPY 15-min Forex Chart by TradingView

Bank of Japan (BOJ) official Uchida seemed to burst the bubble of yen bulls when he downplayed the impact of their potential monetary policy adjustments.

Recall that market participants are waiting on the Japanese central bank to end their ultra-easy monetary policy soon and lift interest rates out of negative territory.

However, Uchida reiterated that they won’t be aggressively hiking rates afterwards and that slowing down their bond purchases might not really move the markets so much.

With that, USD/JPY zoomed up to the top of its range visible on the short-term time frames. Price is currently testing the ceiling at 148.80, just slightly above R2 (148.65).

Sustained gains past this point could spur a rally that’s the same height as the range, which spans roughly 100 pips. USD/JPY could also hit and upside roadblock at R3 (149.05) near a major psychological mark.

On the other hand, if resistance holds, the pair could fall back to the range support near S1 (147.77) or find buyers at R1 (148.41) then the pivot point level (148.01) near another psychological level.

Keep an eye out for the release of the U.S. weekly initial jobless claims report since this could determine whether or not the Greenback could hold on to its gains!

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