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The USDJPY pair is in a bullish consolidation phase today and is moving in a narrow range below the 142.00 level. This level is the highest level reached since November 2022, which occurred during the Asian session. Today's forex news about USDJPY is a summary based on technical analysis from FxStreet.com.
The Japanese yen (JPY) continued to come under pressure following the Bank of Japan (BoJ) decision on Friday to maintain loose monetary policy to support the still-fragile domestic economy. The BoJ decided to keep short-term interest rates at -0.1% and left the yield curve control policy unchanged.
The BoJ also maintained its view that inflation will moderate by the end of this year, suggesting that inflation will remain low amid global uncertainty. This was an important factor influencing the USD/JPY pair at the start of this week. The US dollar (USD), on the other hand, strengthened for the second day in a row and looks set to strengthen after a temporary recovery from a more than one-month low on Friday, based on the Federal Reserve’s (Fed) hawkish outlook. It is worth noting that the US central bank last week decided to pause its year-long interest rate hike cycle. However, they indicated that a further 50 bps rate hike may still occur by the end of this year. This decision gave the US dollar (USD) a boost to gain some additional momentum and provided support to the USD/JPY pair, although the increase did not indicate strong conviction for further strengthening. This means that a more hawkish monetary policy outlook in the US compared to the still dovish policy in Japan could influence the movement of the USD/JPY pair. In the short term, the movement of this currency pair may tend to follow the direction of the strengthening US dollar (USD). The recent weak US macro data has raised questions about the extent to which the Federal Reserve (Fed) still has room to raise interest rates. Moreover, market participants seem confident that the Fed is nearing the end of its monetary policy tightening cycle, preventing a sharp rise in the US dollar (USD). Nevertheless, the generally calmer mood in the stock market has helped limit losses for the Japanese yen, which is considered a safe haven. This has also contributed to limiting the upside of the USD/JPY pair, at least for now. Overall, however, fundamental factors suggest that the likelihood of spot prices rising is most likely. Thus, any significant corrective decline can still be considered as an opportunity to buy, and is likely to remain contained. The market focus has now shifted to the two-day testimony of Federal Reserve (Fed) Chairman Jerome Powell before Congress on Wednesday and Thursday. The testimony will be closely scrutinized for fresh clues on the direction of future interest rate hikes. This meeting will play a key role in influencing the US dollar (USD) price dynamics and provide a significant boost to the USD/JPY pair. Additionally, traders will be looking ahead to the release of US flash PMI data on Friday.
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Warning!
This analysis is based on fundamental and technical views from trusted sources, not advice or invitation. Always remember that this content is intended to enrich the reader's information. Always use independent research first regarding other forex information to be used as a reference in your trading.
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