USD/JPY| Detailed Analysis

11 apr

Detailed Analysis on USD/JPY

Recent Market Dynamics
The Japanese Yen has recently attracted some buyers and recovered a portion of the losses incurred after Wednesday's US CPI release. Concerns about potential intervention by Japanese authorities, coupled with a weaker risk tone, have supported the JPY and exerted pressure on USD/JPY.
Divergent Monetary Policy Expectations
Divergent expectations regarding the policies of the Federal Reserve and the Bank of Japan are expected to limit any significant corrective moves for the currency pair. While the Fed is moving towards a tightening policy, the BoJ maintains a more accommodative stance.
Key Levels of Resistance and Support
USD/JPY has recently surpassed the resistance level at 153.00, paving the way towards the next significant resistance level. However, risks of intervention by Japanese authorities could lead the pair towards the next key support levels.
Performance During the North American Session
Despite warnings about potential Japanese intervention, USD/JPY has seen an increase during the North American session, staying above the 153.00 threshold.
Strength of the US Dollar
The US Dollar is gaining ground across the board, with the US Dollar Index (DXY) reaching its highest level since November 2023. This is partly due to Wednesday's inflation report, which favored a positive reaction for the dollar.
Reaction to US Economic Data
Recent US economic data, particularly on inflation, has bolstered the strength of the US Dollar despite the weaker-than-expected Producer Price Index (PPI) compared to the Consumer Price Index (CPI).
Future Outlook
Considering that US economic data indicates the Federal Reserve's work is not yet complete, it is expected that the US Dollar will continue to strengthen in the near term. Additionally, US Treasury yields have increased, further enhancing the outlook for the American currency.
Japanese Authorities' Reactions
On the Japanese front, Finance Minister Suzuki has stated that Japanese authorities will not rule out any measures to address excessive yen volatility, highlighting a high sense of urgency in monitoring the currency situation.