Japanese Yen to USD Heads to 149, After Dovish BOJ, Buyers Look at 150
USD/JPY made quite a bullish run in January, as the FED turned hawkish, while the BOJ (Bank of Japan) remained steady in its neutral position regarding monetary policy, awaiting spring wage negotiations. However, the USD/JPY price has been consolidating around 147.50-148, with traders looking uncertain whether to continue the bullish momentum toward 150 and eventually to the record high of 152.
In the last two months of 2023 we saw a major dip in this pair after it retested the highs from 2022, but buyers were unable to push above them and the price retreated to 140 lows as the FED turned dovish, pointing toward the start of the rate cut process. The Bank of Japan on the other hand, hinted at a rate hike, which helped the JPY, sending this forex pair lower.
Bank of Japan Remains Accommodative
However, the BOJ pulled back as inflation is falling back toward the target in Japan, while the FED is pushing the first rate cut further away, probably in May. The robust NFP (Non-Farm Payrolls) report last Friday which followed the hawkish FOMC meeting on Thursday, gave the USD a strong boost, especially in USD/JPY , which sent this forex pair more than 300 pips higher, with a 3% rise over the last three days.
But buyers ran into severe resistance around 148.80, which represents the top price in January and retreated more than 100 pips down. Furthermore, additional hurdles exist around 149.00, which reflects a round psychological level. As a result, the buying momentum has begun to fade as this pair is overbought, as shown by the stochastic indicator on the daily chart.
This morning we had Bank of Japan officials holding speeches, which sounded dovish once again. Uchida, a Bank of Japan (BOJ) official, thinks that the extraordinarily loose monetary policy stance would not alter significantly. Even after the end of negative interest rates, the BOJ is unlikely to raise rates aggressively. Uchida emphasised that even if negative rates are abandoned, accommodating circumstances will remain, signaling a cautious attitude to prospective policy changes. That sent USD/JPY popping higher to 148.70, approaching the major levels at 49 and 150.
USD/JPY Live Chart
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