Bullish Signs for USD/JPY As Lows Get Higher
USD/JPY turned bullish early this year after being on a steep bearish trend for about three months in Q4 of 2022. This pair gained more than 10 cents as the USD continued higher on better economic data from the US, while the JPY was slipping lower as safe havens lost appeal.
But the 200 SMA (purple) stopped the climb on the daily chart and we saw a reversal last month. Although the decline stopped above the previous one, making a higher low, which is a bullish sign. This forex pair continues to make higher lows, with the 20 SMA (gray) turning into support last week, so buyers are in control, with the new Bank of Japan governor Ueda keeping the mild rhetoric.
Comments From BOJ Governor, Kazuo Ueda
- Positive signs are emerging in prices, wage growth
- Will achieve the inflation target, although it may take time
- No immediate need to review the 2013 joint statement with the government
The central bank is currently moving cautiously, but many people will be paying attention to their views on inflation during their upcoming policy meeting. If they express a desire to reach the 2% inflation target within the next two years, it could be interpreted as a sign that they may begin to consider moving away from the current extremely accommodative monetary policy stance.
USD/JPY continues to show buying sentiment, as it pushed above the 134.00 resistance level yesterday, which was the high from last week. This strengthens the belief that the bullish trend will continue for this pair, as it is trading on a bullish channel on the chart. The next target for the pair comes at 135.10.
So, the bullish momentum is expected to persist, since moving averages are turning into support now on the daily chart. In case the 134.00 level is broken, the price may face a test of the critical support level at 133.30 before making any further attempts to rise.
Although today we saw a decent jump in the Chinese GDP which helps boost the value of risk assets and alleviate concerns of an imminent recession. Although, China’s fixed asset investment declined last month, but the industrial production and retail sales data showed a decent improvement for the month of March, which is negative for safe havens such as the JPY and GOLD .
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