Japanese Yen (JPY) attracted sellers after experiencing an intraday rise on Wednesday and remains cautious against the US dollar ahead of the European session. Today's economic data from Japan, including Retail Sales and Industrial Production, fell short of market expectations, which is a primary reason for the weakness of the domestic currency. The buying action of the US dollar, supported by minimal speculation of an interest rate cut by the Federal Reserve (Fed), helped USD/JPY recover about 60-65 pips from the 147.20-147.15 level.

Although comments from the IMF director regarding currency intervention did not significantly impact the JPY's rise, the hawkish stance from the Bank of Japan’s Summary of Opinions, along with geopolitical risks and economic uncertainty in China, is expected to limit the decline of the JPY. Additionally, the drop in US Treasury yields may constrain the dollar's strength and the USD/JPY pair.

As the much-anticipated FOMC meeting approaches, where the US Central Bank is expected to maintain the key interest rate, traders may refrain from taking aggressive positions. They would prefer to wait for the outcome of the meeting, which is expected to provide signals about the Fed's future interest rate policy. This will play a key role in determining the short-term price dynamics of the USD and influence the USD/JPY pair. In preparation for key risks, traders should also pay attention to the upcoming US ADP report and Chicago PMI.

Market Movement Summary: The Japanese Yen weakened within a general trading range, but the decline appears limited.

  1. The Japanese Yen has lost its appeal after weak Retail Sales and Industrial Production data for Japan in December, although the Bank of Japan's hawkish stance is expected to limit the decline.
  2. Government data showed that Japan's Retail Sales grew by 2.1% in December, but this was below the consensus estimate of 5.1%.
  3. Japan's factory output rose by 1.8% from November in December, although this was below the expected growth of 2.4%.
  4. Japanese government officials stated that January's production forecast is likely to decline due to the shutdown of some car factories and the limited impact of the Noto earthquake.
  5. Japan's Consumer Confidence Index rose to 38.0 in January, an increase of 0.8 points from the previous month.
  6. The Bank of Japan's January 2024 Summary of Opinions suggests that the central bank should maintain its monetary easing policy.
  7. Bank of Japan board members discussed the possibility of ending the negative interest rate policy.
  8. The risk of increased military actions in the Middle East supports the safe-haven Japanese Yen and limits the strengthening of USD/JPY.
  9. Iran's envoy to the UN stated a definitive response to any attacks against Iran or its citizens outside its borders.
  10. The US dollar attracts positive interest as investors lower their expectations for interest rate cuts by the Federal Reserve.
  11. The JOLTS report indicates an increase in job openings in the US in December.
  12. The number of job openings reached 9.02 million, indicating that the labor market is too strong for the Fed to lower interest rates.
  13. The chances of a rate cut in March have fallen below 50% as investors await signals from the FOMC policy.
  14. The release of the US ADP report and Chicago PMI on Wednesday may provide a boost, but the market reaction in the near term is likely to be temporary.

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Warning!

This analysis titled "Japanese Yen Today Stuck Near Lowest Level Against US Dollar" is based on insights from fundamental and technical perspectives from reliable sources and does not constitute advice or an invitation to trade. Always remember that this content aims to enrich the reader's information. Always conduct your own independent research regarding other forex information to serve as a reference for your trading.

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