USD/JPY Forecast and News
USD/JPY drops to test 157.00 amid thin trading
USD/JPY turns south to test 157.00 in Thursday's Asian trading, erasing early gains. The pair loses traction as risk sentiment deteriorates on bleak Chinese PMI data and revives the safe-haven demand for the Japanese Yen. Thin liquidity conditions also exaggerate USD/JPY moves as Japan is on holiday.
Latest Japanese Yen News
USD/JPY Technical Overview
The USD/JPY pair trades near 157.80 on Monday, maintaining its bullish momentum within an ascending channel on the daily chart. The 14-day Relative Strength Index (RSI) hovers just below the 70 level, supporting the bullish trend. However, if the RSI surpasses the 70 mark, it could indicate an overbought condition, potentially triggering a downward correction.
On the upside, the USD/JPY pair may retest its monthly high of 158.08, reached on December 26. A decisive break above this level could pave the way for further gains, with the pair potentially targeting the ascending channel’s upper boundary near 160.60.
The immediate support lies at the nine-day Exponential Moving Average (EMA) around 156.79, closely aligned with the ascending channel's lower boundary near 156.50.
Fundamental Overview
Japan’s Jibun Bank Manufacturing PMI reached 49.6 in December, slightly exceeding the flash estimate of 49.5 and improving from 49.0 in November. Although it marked the highest level since September, it still signaled the sixth consecutive month of declining factory activity.
The Nikkei 225 fell to around 39,950 on Monday, snapping two days of gains. The decline came after a slight drop in US futures, following Friday's Wall Street slump driven by rising Treasury yields and indications of more restrained interest rate cuts in 2025.
Japanese Yen holds minor gains as US Dollar edges lower amid subdued Treasury yields
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, trades around 108.00. The Greenback faces challenges as US Treasury bond yields depreciate on Monday. 2-year and 10-year yields stand at 4.32% and 4.62%, respectively, at the time of writing.
- The US Dollar may gain support from growing expectations of fewer rate cuts next year by the US Federal Reserve (Fed). Traders continue to digest the Fed’s hawkish pivot. The Fed cut its benchmark interest rate by a quarter point at the December meeting, and the latest Dot Plots indicated two rate cuts next year.
- The headline Tokyo CPI inflation rose to 3.0% YoY in December, up from 2.6% in November. Meanwhile, the Tokyo CPI excluding Fresh Food and Energy increased to 2.4% YoY in December, compared to 2.2% the previous month. The Tokyo CPI excluding Fresh Food also climbed 2.4% YoY in December, slightly below the expected 2.5% but higher than the 2.2% recorded in November.
- On Friday, Japan's Finance Minister Katsunobu Kato said that he recently saw one-sided and sharp foreign exchange (FX) moves. Kato further stated that the official will take suitable measures against excessive foreign exchange movements.
- The Bank of Japan (BoJ) released the Summary of Opinions from its December monetary policy meeting on Friday, highlighting plans to adjust easing measures if economic conditions align with expectations. One BoJ board member emphasized the importance of monitoring wage negotiation momentum, while another stressed the need for scrutiny of data to determine any changes to monetary support.
- The Bank of Japan October meeting Minutes released this Tuesday reiterated the possibility of gradual rate hikes if inflation trends align with expectations, with a potential path to 1.0% by late fiscal 2025. The Minutes also emphasized a cautious approach to monetary policy, wage-driven economic growth amid domestic and global uncertainties, and fiscal measures to counter deflationary pressures.
- Earlier in the month, BoJ Governor Kazuo Ueda said that the central bank expects the Japanese economy to move closer to sustainably achieving the BoJ's 2% inflation target next year. Ueda also added, "The timing and pace of adjusting the degree of monetary accommodation will depend on developments in economic activity and prices as well as financial conditions going forward."
USD/JPY Big Picture
USD/JPY Bullish Themes
USD/JPY Bearish Themes
Latest JPY Analysis
Editors' picks
EUR/USD extends slide toward 1.0300, touches new two-year low
EUR/USD stays under bearish pressure and trades at its lowest level since December 2022 below 1.0350 on Thursday. The pair turned south amid a resurgent US Dollar demand and worsening market mood. Investors stay cautious at the onset of 2025, awaiting the US jobs data for fresh incentives.
GBP/USD slumps to multi-month lows below 1.2450
Following an earlier recovery attempt, GBP/USD reversed its direction and declined to its weakest level in nearly eight months below 1.2450. The renewed US Dollar (USD) strength on worsening risk mood weighs on the pair as markets await mid-tier data releases.
USD/JPY drops to test 157.00 amid thin trading
USD/JPY turns south to test 157.00 in Thursday's Asian trading, erasing early gains. The pair loses traction as risk sentiment deteriorates on bleak Chinese PMI data and revives the safe-haven demand for the Japanese Yen. Thin liquidity conditions also exaggerate USD/JPY moves as Japan is on holiday.
Gold price appreciates due to a potential central bank purchases this year
Gold price rises for the third consecutive session on Thursday, following a more than 27% increase in 2024, marking its best performance since 2010. This upward momentum has been driven by US monetary easing, persistent geopolitical tensions, and record central bank purchases.
WTI holds positive ground above $71.50 as API reports draw in crude inventories
West Texas Intermediate, the US crude oil benchmark, is trading around $71.60 on Thursday. The WTI price trades with mild gains after the American Petroleum Institute weekly report showed US crude stockpiles continued to shrink.
Majors
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Signatures
USD/JPY YEARLY FORECAST
How could USD/JPY move this year? Our experts make a USD/JPY update forecasting the possible moves of the yen-dollar pair during the whole year.
USD/JPY FORECAST 2024
The Japanese Yen could receive support from the BoJ if it indicates a shift toward ending its ultra-loose monetary policy stance, potentially through a rate hike that would mark the end of seven years of negative rates. Governor Ueda and Deputy Governor Hino offered some comments about it in December. Rumors and speculations in that direction would trigger momentum for the Yen. Read more details about the forecast.
The divergence in monetary policy between the Federal Reserve and the Bank of Japan led the pair to test the multi-decade high near 152.00.
MOST INFLUENTIAL POLITICAL EVENTS IN 2024 FOR USD/JPY
There is a possibility that the BoJ might end its negative interest rate policy (NIRP) by raising the key rate to 0.00% in 2024. Some analysts anticipate the eventual end of YCC by January, while others believe it is more likely to occur during the second quarter. A significant challenge for the BoJ is to exit from NIRP without disrupting the economy.
Governor Kazuo Ueda has emphasized that any move will be carefully calculated, and the central bank will likely prepare the market for a change. This scenario is more likely to materialize if inflation in Japan remains above 3%.
Influential Institutions & People for the USD/JPY
The US Dollar Japanese Yen can be seriously affected by news or the decisions taken by two main central banks:
The Federal Reserve Bank (Fed)
On the other
FED Official Website, on Twitter and Facebook
The Bank of Japan (BOJ)
The Bank of Japan is the central bank of Japan and it's a juridical person established based on the Bank of Japan Act, nor being a government agency either a private corporation. The most important missions of the BOJ are the following: to issue and manage banknotes, to implement monetary policy and to ensure stability of the financial system. Almost all of the decisions are taken by the Policy Board, formed by a bunch of members working to provide currency and monetary control and setting the next moves that the central bank will take.
BOJ Official Website and on Twitter
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
Kazuo Ueda
Kazuo Ueda is the 32nd and current Governor of the Bank of Japan. He is a professor and the dean of the business department at Kyoritsu Women's University in Tokyo and the external director at JGC Holdings Corp, an engineering company and at the state-owned Development Bank of Japan. The 71-year-old is widely seen as an expert on monetary policy but is seen as a surprise appointment by analysts. He was not even considered a dark-horse candidate. Ueda wasn’t really on their radar because the BOJ governor job has traditionally been assumed by a long-serving Finance Ministry bureaucrat or central bank official.
Ueda on Wikipedia's Profile
BOJ NEWS & ANALYSIS
FED NEWS & ANALYSIS
About USD/JPY
The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low-interest rate and is normally used in carrying trades. This is the reason why is one of the most traded currencies worldwide. In this pair, the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from the United States of America) and Japanese economies.
Trading this currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when referred to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is due to the fact that both currency pairs also use the US Dollar as the base currency. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.
Related pairs
GBP/USD
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', referring to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from the United States of America). The Cable is a closely watched and widely traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. For that reason, all the macroeconomic data related to the United States and the United Kingdom affects the price of this pair. One of the events which affected most the volatility of the pound vs. dollar was Brexit.
EUR/USD
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity of Euro Dollar is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.