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Yen in calm waters ahead of inflationJapan has seen inflation move higher, although nowhere near the levels in the US or the UK, which are not far from double-digits. Last week, core CPI for May came in at 2.1% YoY, unchanged from April. This was the second straight month that core CPI remained above the BoJ's target of 2%. This is a dramatic shift, given that Japan struggled with deflation for decades. The driver behind rising inflation is higher food and energy prices, as well as the plummeting yen. Notably, wages have not risen. The Bank of Japan has insisted that this cost-push inflation is temporary. The BoJ wants to see stronger domestic demand and an acceleration in wage growth before it will consider altering its ultra-loose monetary policy. This has taken a massive toll on the yen, which has plunged about 17% this year. The BoJ released its Summary of Opinions from the June meeting, with members showing support for the Bank's monetary policy. One member said that upward pressure on JGB yields could be expected. The Bank has tenaciously defended its yield curve control and intervened in order to cap 10-year yields at 0.25%. With the Federal Reserve in the midst of an aggressive rate-tightening cycle, the US-Japan rate differential will widen, putting more pressure on the yen. It's a busy week ahead for Japanese releases on the calendar, highlighted by further inflation releases. On Tuesday, we'll get a look at BOJ Core CPI, the central bank's preferred inflation gauge. This will be followed on Friday by Tokyo Core CPI for June, which could breach above 2.0%, after a 1.9% gain in May. USD/JPY tested resistance at 1.3540 earlier in the day. Above, there is resistance at 1.3654 USD/JPY has support at 1.3409 and 1.3295
by OANDA
Japanese yen eyes inflation reportThe Japanese yen is in positive territory today, extending its gains from yesterday. USD/JPY is trading at 135.46 in the European session, down 0.56% on the day. The yen has gained a bit of strength as USD/JPY is back below 136.00, after rising close to 136.71 earlier in the week, its highest level since September 1998. The yen received a reprieve from its recent slide due to a drop yesterday in US Treasury yields, rather than any newfound strength related to the yen. This is another indication that USD/JPY movement is at the mercy of the US/Japan rate differential, with the Bank of Japan holding firm on its yield cap for JGBs. The BoJ is not showing any signs of adjusting its ultra-accommodative policy, leaving the yen to bear the brunt of this inflexible stance. As a result, the yen has been pummelled by the US dollar, with the yen plunging some 17% in 2022. The central bank and Japan's Ministry of Finance have jawboned about the exchange rate, noting their concern. The verbal intervention has clearly not worked, raising the question as to whether Tokyo has a 'line in the sand', which if crossed, would trigger intervention in the currency markets to support the ailing yen. There had been speculation that a move above 125.00 or 130.00 could result in a response, but that failed to happen. Currently, there are voices stating that the 140 level is that line in the sand. BoJ Governor Kuroda has insisted that the Bank needs to support Japan's fragile economy with monetary easing, and has said that the exchange rate is not a policy target. Kuroda has even said that a weak yen has benefits for the economy, such as making exports more attractive. Given this stance, I question whether a 140.00 yen will trigger currency intervention. True, the yen is at 24-year highs, but let's not forget that USD/JPY has been above 200.00 and even 300.00 in the past, and the BoJ has indicated that the exchange rate is not a priority. There is resistance at 1.3657 and 1.3814 USD/JPY has support at 1.3404 and 1.3247
by OANDA
In Athena's CampWhat I am seeing is a lot of questions around the hanging and shallow nature of the pullback of 'iv' in this 'C' leg. We will also cover some of the Fed talk, which is getting somewhat over-cooked. In my opinion, the issue with the pullback in 'iv' is one of the classical issues with momentum and impulsive plays. We are here talking about the same leg from 100, 103, 105, 108, 114, 118, 120, and now 134. The value in FX is spotting divergences ahead of time, we outguessed the statically weak BOJ, while FED showed dynamic strength triggering an impulsive leg . In this impulse, the problem around when to add becomes important because the natural stop loss (i.e below the last 108 swing lows) reaches beyond the realms of any r:r. So has the train already left? It is essential for you to make up your own mind, based on your own experience, about the problem I have just indicated. Try, as Buyers aim to reach their natural target, e.g 150, to find some final hit-and-runs with the news flow. This has been an excellent live example so far. It will do you good to get a feel of how quickly impulsive legs can become in the middle and late stages. In addition, it has been an enriching experience of just how important it is to infiltrate your opponent before they realise the battle has even started. Hopefully some useful perspective, the fruits of the USDJPY maps stretching the last few years, will help you along this thorny road, but only painful experience can help you find your last minute entries here.
Long
by ridethepig
11
Yen falls back down after BoJ balksThe Japanese yen continues to post strong swings this week and is up sharply on Friday. USD/JPY is trading at 134.67 in Europe, up 1.86% on the day. It's been a busy week, with the markets still digesting some dramatic moves by central banks. The Fed and SNB delivered massive salvos in their fight against inflation, and the BoE continues to tighten, albeit at a more modest pace. The week wrapped up with the Bank of Japan policy decision earlier in the day. These meetings are usually on the dull side, with the central bank merely reaffirming its ultra-loose policy, with the occasional tweak. Today's meeting was closely watched, however, as the BOJ's yield curve stance has been under pressure and there was speculation that the BoJ might retreat and release the cap of 0.25% on 10-year JGBs. In the end, the BoJ did not blink or budge, maintaining its policy for yield curve control and QE. The BOJ reaffirmed it will continue its policy of rock-bottom rates, even though other major central banks are tightening policy, as we saw this week with the Fed, BOE and SNB. Governor Kuroda has insisted that monetary easing remain in place, given Japan's slow recovery from the Covid-19 pandemic. With inflation barely at 2%, the central bank's target, Kuroda can afford to continue his loose policy and tenaciously defend the BoJ's yield curve. The BoJ didn't adjust policy today but it was noteworthy that the policy statement added the exchange rate to its list of risks, something we haven't seen in previous statements. The yen hit a 24-year low at 135.60 earlier this week and could fall even further. The Bank is sending a message that it is monitoring the exchange rate, but I question whether this will deter the markets from continuing to test the yen - previous jawboning from the BoJ and Ministry of Finance didn't succeed in stemming the yen's slide, and we could well be on our way to a 140 yen if the US/Japan rate differential continues to widen. USD/JPY is testing resistance at 133.14. Above, there is resistance at 1.3585 There is support at 131.72
by OANDA
USDJPY - keep buying the dips, more expected the week of 06 JuneThis pair has made parabolic gains in 2022 and there seems to be nothing that can stop it. As the weekly chart shows, we did have a retracement recently, but note that the gains made by the bears in 3 weeks were recovered by the bulls in just a week. Price is now on the verge of breaking the 21 year high at 131.347. Checking out the fundamentals, I realized that Japan is keeping interest rates around 0-0.10% while the USA is above 1% and in the process of regular rate increases. Some analysts are projecting as much as a total of 3% increase in 2022. Something will probably change here but as long as the difference is so wide, we can expect the USDJPY to keep rising. There is also the phenomenon of ‘mean reversion’. Price does have the tendency to come back to its mean (see how far above the 20 EMA, price currently is). This huge gap has to close although it may take several months or longer to bridge it to a reasonable extent. This does mean that we should expect pullbacks from time to time. In view of the above, my bias is strongly bullish and my approach will be to keep buying the dips as they occur. I cannot see any reason for any other action. If you like my analysis, please give it a “thumbs up” and follow me to get immediate notifications. Always use sound money and risk management and stay patient in all your trades.
Long
by Trading_Vista
3
EUR/JPY tops 144 as ECB-BoJ gap widens: 149 in sight?The euro-yen exchange rate ( EUR/JPY ) hit new year-to-date highs, surpassing the psychological level of 144, as monetary policy divergences between the European Central Bank, which has already widely telegraphed its first rate hike in over a decade, and the Bank of Japan, which remains imprisoned by an extremely dovish monetary policy, widened further. The spread between the yield on a German 2-year bond and the Japanese equivalent – which acts as a proxy for measuring monetary policy divergences between countries – has now reached 0.7%, the highest since August 2011, exerting upward pressure on the EUR/JPY exchange rate. The Eurozone is now experiencing more inflationary pressures than Japan. Annual inflation in the Eurozone surged to 8.1% in May 2022, a new record high and well above market expectations of 7.7%, while consumer prices in Japan only grew by 2.5% year on year in April 2022. While the Bank of Japan can still tolerate the yen's depreciation – which has lost 16% versus the dollar and 11% against the euro since the start of the year– due to the presence of a relatively contained inflation, the ECB no longer has this luxury. The market is anxiously awaiting the ECB's meeting tomorrow. A rate rise in July is already priced in, and additional hawkish signals (such as leaving the door open to a 50 basis point raise or not ruling out quantitative tightening by the end of the year) may provide additional support for the euro versus the Japanese yen. Next barrier is 4% away at 149 levels, which corresponds to the EUR/JPY pair's December 2014 highs. Beyond this level, one may consider 153.8, which served as a major support level from 2007 to September 2008.
by Capitalcom
Dollar pushes wobbly yen to 130The Japanese yen continues to lose ground, as USD/JPY has punched above the symbolic 130 line. In the North American session, USD/JPY is trading at 130.01 up 1.02% on the day. The US dollar is having its way with the yen this week as USD/JPY has surged 2.23%. The driver behind the yen's plunge is an upswing in US Treasury yields. The 10-year yield rose from 2.84% to 2.93% today, and as we have often seen, the yen finds itself at the mercy of the US/Japan rate differential and is sharply lower today. Most of the major central banks have embarked on rate-hike cycles in order to contain spiralling inflation, with the noticeable exception of the Bank of Japan. The BoJ has continued its ultra-accommodative policy, which it insists is needed to boost the fragile economy. BoJ Governor Kuroda has defended keeping interest rates low, saying that wages and service price inflation have remained modest. The BoJ continues to view cost-push inflation as transient and is not all that concerned with inflationary pressures, which are much lower than we are seeing in the other major economies. In the US, the Fed commenced quantitative tightening this week and the Fed continues to send out hawkish messages. Fed Governor Christopher Waller fired the latest hawkish salvo from the US central bank, saying he supported more rate hikes, even above the "neutral level", which is not supportive or restrictive for growth. The Fed estimates the neutral level to be around 2.5%, which leaves plenty of room for further hikes until the neutral level is approached. Fed Chair Powell has signalled that the Fed will deliver 50-bps hikes in June and July, followed by a pause in September. USD/JPY has broken past resistance at 1.2890 and 1.2973. The next resistance line is at 131.24 There is support at 128.01
by OANDA
USD/JPY - Head and Shoulders Breakout?The rally in USDJPY from early March to early May was huge, driven by a combination of a soaring greenback and a BoJ determined to support its yield curve control policy tool. But the last couple of weeks have brought some relief in the pair, driven primarily by the dollar paring gains against the broader market. And the pair may have just broken below an interesting technical support level that could signal a more significant correction. A head and shoulders appears to have formed over the last month and the break of the neckline is potentially in progress. This also comes immediately following the break of the 200/233-period SMA band on the 4-hour chart which did provide support for most of the last week before finally giving way. If this breakout holds, it could potentially point to quite a significant correction based on the size of the head and shoulders formation and the projections that could indicate.
by OANDA
Japanese yen hits 20-year lowThe Japanese yen is slightly lower at the start of the week. In the Asian session, the yen fell as low as 131.35, which marked a 20-year low. The speed of the Japanese yen's depreciation has been remarkable, falling 12% against the US dollar in just three months. The formula for the yen's slide has been relatively simple - US Treasuries have been moving higher, while the BoJ has fiercely defended its yield control curve, capping the 10-year yield at 0.25%. Since the yen is extremely sensitive to the US/Japan rate differential, the dollar has pummelled the yen. Moving forward, the BoJ isn't about to change its stance and allow JGB yields to increase. The central bank is committed to an ultra-loose monetary policy and has been using debt financing, with the government's debt currently at a staggering 250% above GDP. This means it becomes a huge expense for the government if JGB yields move upwards. US Treasury yields continue to move higher, with the 10-year yield inching higher on Monday to 3.13%. The risk on USD/JPY remains tilted upwards, but the question is whether the BoJ will continue to sit on the sidelines and allow the yen to sink. Does the BoJ have a 'line in the sand' when it comes to the exchange rate? There had been talk of the 130-level triggering intervention, but that hasn't happened, as the BoJ and Japan's Ministry of Finance (MoF) have limited themselves to jawboning that they are monitoring the situation and are deeply worried about the yen's rapid descent. According to a BoFA note on Monday, 140 is a key line that could trigger yen intervention. The 140-level has held since 1998, and if breached, the MoF could respond and buy yen in order to stabilize the currency. In the meantime, the yen will likely continue to lose ground, with the Federal Reserve expected to continue to tighten at an aggressive pace. USD/JPY faces resistance at 1.3136 and 1.3218 Ther is support at 1.3000 and 1.2918
by OANDA
Yen tumbles ahead of BoJ meetingThe Japanese yen has reversed directions on Wednesday and is sharply lower. USD/JPY is trading at 128.54 in the North American session, up 1.04% on the day. The Bank of Japan holds its policy meeting later today, but investors shouldn't expect any major moves. The central bank has done little more than jawbone as the yen continues to fall. It's been a miserable April for the currency, as USD/JPY has surged 5.50% and is closing in on the symbolic 130 level. The BoJ is unlikely to intervene in order to combat the yen's slide, and Governor Kuroda has said on more than one occasion that a weak yen is good for the Japanese economy. Still, the BoJ does not like to see such sharp movements in the exchange rate, and we could a tweak in policy in order to give a lift to the ailing yen. The BoJ has been far more interventionist when it comes to yield curve control. Earlier this week, the Bank made an offer to purchase an unlimited amount of 10-year JGBs, in order to cap yields at 0.25%. This marked the third time since February that the BoJ has stepped in to protect its yield curve control, a centrepiece of its ultra-loose policy. Japan hasn't been immune to the global surge in inflation, but with CPI well below 2%, the BoJ isn't all that concerned with inflation and shows no signs of changing monetary policy. USD/JPY risk remains heavily tilted higher, primarily because of the US/Japan rate differential, which continues to widen. The Federal Reserve is in full throttle, with an oversize half-point hike almost a given at next week's policy meeting. Fed Chair Powell and other FOMC members have telegraphed that further 0.50% hikes are on the table, as the Fed prepares to come out with guns blazing to subdue inflation, which has become Public Enemy No. 1. USD/JPY has broken above resistance at 128.07. Above, there is resistance at 1.2989 USD/JPY has support at 1.2674 and 1.2492
by OANDA
USDJPY: Something's gotta giveJapanese officials are getting very uncomfortable with the recent yen weakness. USDJPY sliced through 128 earlier, and looks set for a move to 130 in no time. Finance Minister Suzuki repeated his mantra that “Stability is important and sharp currency moves are undesirable”. Then he took it a step further, questioning the merit of the weak yen policy... “Weak yen has its merit, but demerit is greater under the current situation where crude oil and raw materials costs are surging globally, while the weak yen boosts import prices, hurting consumers and firms that are unable to pass on costs.” Suzuki added, “we will closely communicate with the U.S. currency authorities to appropriately deal with this issue.” And he'll meet with Janet Yellen on the side lines of the G20 summit to do just that. Any response is more likely to treat the symptoms rather than the causes, but it suggests that the speed of the recent moves has Japan's Ministry of Finance and the Bank of Japan sufficiently concerned to push back. Structurally, there's not much they can do other than try and smooth out the volatility. US yields keep on rising while Japanese yields are stuck below the 0.25% level (the BoJ has already been forced to step in and defend the yield cap), which drives traders to buy USD and sell JPY. An interesting aspect to note here is with USDJPY ticking towards 130, we're seeing the Japanese 10 year yield push against the 0.25% yield cap - which in my mind feels like something will break. The weak yen is making imports (even) more expensive, which just makes the problem worse for an economy which is highly import dependent across all sectors. 130 is a level that's been flagged as a potential pain point for a while, and US 10y yields (which typically correlate with USDJPY) are also within touching distance of 3%... Summing up, be on the lookout for further statements or actual intervention in the next few days, and don't be certain it'll be easy to get long from here, but we believe a bit more pain is to come as our datasets are suggesting that retail traders are net short USDJPY 75:25 (shorts vs longs).
by FinkPro
23
Japanese yen extends slideIt was another rough week at the office for the Japanese yen, as USD/JPY fell 1.67%. The crumpling yen hasn't eked out a daily gain since March and has extended its losses today. In the North American session, USD/JPY is trading at 126.88, up 0.42% on the day. The yen is essentially at the mercy of the US/Japan rate differential, and with that differential continuing to widen, the yen continues to head south. US 10-year Treasury yields rose to 2.87% earlier today, their highest level since 2019. The outlook for USD/JPY remains bearish and we could see the symbolic 130 line fall in the short term. The US Federal Reserve is in hawkish mode, and has telegraphed its intent to increase rates by 0.50% at the May 4th meeting. CME's Fed Watch has set the likelihood of this scenario at 88%, meaning it's a done deal unless there is some drastic, unexpected development ahead of the meeting. The Fed is scrambling to fend off spiralling inflation, which hit 8.5% in March, a 40-year high. With investors looking for clues about how tight the Fed plans to go, comments from senior Fed officials will be carefully scrutinized and could be market-movers. Later today, Fed President James Bullard, one of the most hawkish FOMC members who favours aggressive action from the central bank, will deliver public remarks later in the day, and the markets will be all ears. USD/JPY pushed above its multi-year high of 125.80 last week and the upswing shows no signs of easing. The Bank of Japan has expressed its uneasiness at the rapid fall in the yen's value, but has refrained from anything more than "jawboning" about the issue. It's unlikely that the BoJ will intervene except as a last resort in order to keep 10-year JGB yields below 0.25%, which the Bank has designated as its line in the sand. USD/JPY continues to climb and break above resistance lines. The pair faces resistance at 1.2740 and 1.2837 There is support at 125.72 and 1.2475
by OANDA
1
USD/JPY - Running into Major ResistanceThe rally in USD/JPY has massively accelerated in recent weeks as markets and the Fed have become increasingly hawkish on US interest rates. This has happened at a time when many central banks are heading in that direction, even the ECB which at one point looked years away from interest rates above 0%. While they haven't yet conceded on the kind of rate hikes that the markets are pricing in, they're certainly heading in that direction. The BoJ is the outlier here. Inflation is higher but core remains stubbornly low, meaning the pressure on the central bank to raise rates is basically non-existent. But rather than allow policymakers to sit back and bask in their good fortune, being the outlier has presented other challenges, most notably around the central bank's yield curve control (YCC) policy. When central banks around the world have rock bottom interest rates, maintaining YCC is quite straightforward. Rates may fluctuate a little but broadly speaking, keeping them within certain limits poses no major threats. When yields around the world are rising and countries are experiencing high inflation, suddenly JGBs start seeing their yields rise in tandem and the BoJ is forced to defend those caps which can pose some problems, as we're seeing. At a time when the US is raising rates aggressively, the BoJ is being forced to buy unlimited JGBs in order to keep a cap on yields which is sending the USD/JPY pair soaring. In some ways, this is good for Japan and its exporters. In other ways, it's not so good as they also import a lot, including energy which is already very expensive right now. But the general rule of thumb for policymakers is there is no defined good or bad level for currency, rather a belief that the speed of those moves matters much more. Rapid appreciation or depreciation (as we're now seeing) can be problematic. So the recent moves have prompted speculation that something needs to happen. That could be FX interventions from the Ministry of Finance or a shift in the YCC policy from the BoJ, perhaps widening the band or lifting the level it wishes to hold the yield around. From a technical perspective, the USD/JPY pair has quickly risen to a level where it has previously backtracked from, both in 2007 and 2015. It's this knowledge that may have contributed to the profit-taking we saw yesterday and today. A move above here would be a potentially massive step and may make the MoF and BoJ nervous. A move below the ascending trend line could signal a deeper corrective move, although that could quickly attract interest given the scale of the move that preceded it. Signs of either of the previously mentioned measures could see that wane but until then, things could get uncomfortable for policymakers as the divergence between Japan and most other countries continues to widen.
by OANDA
USDJPY (Full Review)The dynamic strength of the greenback This strength lies in the lust to expand from the base (= the tendency towards 103xx-104xx) and further in the circumstances where technical breaks occurred or are made possible. Seller's outpost at December 2016 highs is falling apart from the Fed superiority. Buyer's are now showing that momentum can be keenly exercised in the break above 118.6x. An examination of the before and after gives an undoubted advantage to buyers. The Yen as endgame weakness Critical for an evaluation of the issues raised is the fact that the war/sanctions are causing Japan to lose much of its glory to the Panda. There is no longer any likelihood of shifting gears. Japan has not yet somehow managed to get going again in the middle game and it looks inevitable. Yen is suffering a lot not only because of BOJ isolation and need of protecting, but also because the technicals are so weak. Consider for example when we were sitting at 108xx with an ABCDE slingshot. Now it is clear...The triangle was used for centralising and manoeuvring to form a gateway. All possible movement ever since has been with an impressive degree of one-sidedness; the latest break of 118.6x is unlocking 126xx in the coming weeks/months. Let's sum it up: Buyers are still aiming for the 150 target in an ABC that appears to be a done deal once above 125.8x, whereas sellers remain extremely weak. In addition with quad witching now cleared, the 118.6x break is important unlocking a structural 'crash' and burn momentum move in Yen for this week onwards.
Long
by ridethepig
8
Japanese yen falls to five-year highThe US dollar continues to pummel the Japanese yen. USD/JPY pushed above the 117 line earlier today for the first time since January 2017. USD/JPY is up 0.61% on the day and has recorded a massive gain of 1.76% this week. We continue to see sharp volatility in the currency markets and the Japanese yen has not been immune to the turbulence. Risk apprehension has been fluctuating, depending on developments in the Ukraine crisis. Like the US dollar, the yen is also considered a safe-haven currency, but with the US economy in much better shape than that of Japan, the US dollar has been the big winner from the recent turbulence we're seeing in the markets. As well, commodities are priced in US dollars, so the recent surge in commodity prices has boosted the US dollar. If the Ukraine crisis worsens and commodity prices continue to soar, it is entirely feasible that the USD/JPY will continue its upswing and break above the 120 line. In the US, headline CPI continued to accelerate, with a gain of 7.9% for February YoY. This matched the forecast and was up from 7.5% beforehand. With inflation running at 40-year high, there's little doubt that the Fed will raise rates at next week's meeting, most likely by 25 basis points. Japan ended the week with mixed numbers. Household Spending for January showed a sharp rebound of 6.9% YoY, up from -0.2% in December and above the consensus of 3.3%. However, the BSI Manufacturing Index for Q1 came in at -7.6, down from +7.2 in Q3 and way off the consensus estimate of +8.2. The BoJ is expected to maintain a dovish stance, despite rising inflation. On Friday, a senior BoJ official stated Japan's current and economic price conditions would make it inappropriate to respond with monetary tightening. USD/JPY continues to climb and break above resistance lines. Earlier in the day, the pair broke above resistance at 116.27 and 116.72. The next resistance is at 117.33. There is support at 115.56 and 115.11
by OANDA
2
USD/JPY Primed for Breakout, Ready to Extend Dominant Uptrend?In the wake of the latest US CPI report, where headline inflation clocked in at 7.9% y/y (as expected), continuing to run at 40-year highs, USD/JPY has been trending higher. The Federal Reserve is expected to commence its tightening cycle next week by raising interest rates. Its balance sheet is also no longer expanding. Front-end Treasury yields are on the rise, with the 2-year rate closing at another 2022 high. Favorable monetary policy differentials between the Fed and BoJ may thus continue offering the fundamental fuel for keeping USD/JPY tilted upward. The pair is testing the ceiling of an Ascending Triangle chart formation, where a breakout could hint at uptrend resumption. Such an outcome would expose the December 2016 high at 118.66. Getting there entails clearing the 100% and 123.6% Fibonacci extensions at 117.29 and 118.19 respectively. In the event of a false breakout, keep a close eye on the floor of the chart formation, where rising support could reinstate an upside focus. Breaking under the triangle altogether could spell further losses to come. www.dailyfx.com FX_IDC:USDJPY
by QM_Dubrovsky
Yen rises as Russia launches invasionHopes that diplomatic moves could avert a Russian invasion of Ukraine were shattered early Thursday, as Russia launched a full-scale attack. The move was not all that surprising, given the massive Russian buildup on the border with Ukraine during the past few weeks. Still, the fighting in the heart of Europe has weighed heavily on the financial markets, as risk appetite has fallen sharply. The safe-haven Japanese yen has gained ground and is trading at 3-week highs. Western leaders have strongly condemned the Russian military operation, with NATO's secretary-general calling it 'a brutal act of war'. There will clearly be more sanctions headed Moscow's way, but it's doubtful that this will dissuade Russian President Putin from his aim to force Ukraine back into the Russian orbit. Western Europe is dependent on Russian natural gas and with the US showing no appetite for military intervention, things are looking extremely bleak for pro-Western Ukrainian President Zelensky. On the economic calendar, Japan releases Tokyo Core CPI for February later today. CPI is expected to rise to 0.4%, up from 0.2% in January. Earlier in the week, BoJ Core CPI, the central bank’s preferred inflation gauge, rose 0.8%, lower than the 0.9% gain beforehand. Japan's inflation has been moving higher, although nowhere near the clip we've seen in the US and the UK. Still, with the Russian invasion in Ukraine likely to push energy prices even higher, inflation in Japan should continue on an upswing. Brent crude pushed above USD 100 for the first time since 2014, as the Ukraine conflict threatens to disrupt oil deliveries from Russia, a major producer. The timing couldn't be worse for the central banks of the major economies, which are struggling to contain red-hot inflation. The Fed is still expected to hike rates in March, but it may have to put a pause on additional hikes if economic conditions deteriorate. The 100-DMA at 114.35 is providing support. Close by, there is support at 114.16 115.68 is under pressure as resistance. Above, there is resistance at 116.30
by OANDA
Yen steady ahead of BoJ Core CPIThe Japanese yen has started the week quietly and is trading slightly below the 115 line. The focus will be on Japanese inflation indicators in the coming week, with three events on the economic calendar. Like other major economies, Japan is dealing with a rise in inflation, although the pace has been much more moderate than what we're seeing in the UK or the US. Inflation remains well below the Bank of Japan’s target of 2%, so there is no talk of raising interest rates in the near future. The January reading of BoJ Core CPI, the central bank’s preferred inflation gauge, will be released on Tuesday. The indicator rose 0.9% y/y in December, up from 0.8% and its highest level since May 2016. On Friday, Tokyo Core CPI for February will be released. After a weak reading of 0.2% y/y in December, the indicator is expected to rise to 0.4%.  The crisis brewing in Ukraine remains at a critical stage, as there have been further skirmishes between the Ukraine army and the pro-Russian separatists, with fears that Russia is deliberately creating these flare-ups in order to justify an invasion of Ukraine. Russia has amassed over one hundred thousand troops around the border with Ukraine and could choose to invade at any time. However, there have been some diplomatic moves in the meantime, notably a possible summit between Presidents Biden and  Putin this week. Biden expressed his willingness to meet Putin if there was no invasion. We can expect a ping-pong reaction from the markets in the coming days, with market direction dependent to a large extent on what President Putin does next. 114.61 is under strong pressure in support. Below, there is support at 114.16 There is resistance at 115.68 and 116.30
by OANDA
CADJPY Long IdeaCADJPY has been trading in a downtrend for some time now, however the price has been respecting the key zone of 90.15/90.30. There has been multiple occasions in which the price has fallen to this area and reacted well. Since breaking below this key level on the 24th of January, CADJPY has been setting higher lows and the price has been conforming to an upwards trend line. This morning there was some sell off towards this key area which why our short-term bias is now long considering previous price action. The RSI indicators on the 15m/30m area at oversold conditions which adds to our long bias.
Long
by Orion-Markets
USD/JPY dips ahead of Japanese CPIThe Japanese yen has edged higher for a second straight day. In the North American session, USD/JPY is trading at the 114.00 line. In economic news, Japan releases December inflation data and the BoJ will publish the minutes of its December meeting. In the US, economic releases were mixed. Unemployment claims jumped to 287 thousand, above the forecast of 220 thousand and up from the previous release of 231 thousand. The Philly Fed Manufacturing Index rose to 23.2, up from 15.4 prior and above the consensus of 20.0 points. Inflation in Japan is moving higher, although at a much more modest clip than is the case in the US or UK. Core CPI, which had been hovering close to zero for months, surprised to the upside in November with a 0.5%, up from 0.1% prior. This was its highest level since February 2020. BoJ policymakers aren't losing sleep over surging inflation, but after decades of deflation, rising prices are a novelty for the central bank, as well for businesses and consumers. The BoJ has no plans to shift from its ultra-easy stance, and the bank kept policy intact at this week's policy meeting. Still, it was significant that at the meeting, the bank revised upwards its inflation forecast, which hasn't occurred since 2014.  For the fiscal year starting in April, the BoJ is projecting inflation of 1.1% up from the 0.9% gain it forecast in October. This is noteworthy because the BoJ is acknowledging that inflation could overshoot its projections, something we never saw in the years of deflation. Unlike their counterparts at the Bank of Japan, Fed policymakers are focused on surging inflation and how to contain it. A rate hike is looking increasingly likely in March, but it's unclear just how much of a push the Fed has in mind. We've seen a measured approach of 0.25% hikes for years, but with inflation running at a 40-year high, there is talk of a dramatic 0.50% hike. The Fed is clearly sensitive to market conditions, so odds are that it will avoid a huge 0.50% jump in rates. Still, unusual times may require unusual methods, so it will certainly be interesting to follow the Fed in the weeks ahead. There is resistance at 115.54, followed by 116.88 USDJPY has support at 113.18 and 112.16
by OANDA
3
Yen steady after BoJ meetingThe US dollar has posted small gains, as USD/JPY briefly punched above the 115 line in the Asian session. The yen looked golden last week with gains of 1.15%, but has given up half of those gains so far this week. The Bank of Japan's policy meetings are generally uneventful affairs, with the bank reaffirming its monetary policy. The bank did maintain policy, keeping interest rates at -0.1% and maintaining bond yield targets and asset purchases. But there was a difference at this meeting, with the bank revising upwards its inflation forecast, for the first time since 2014. This is significant because the BoJ is acknowledging that inflation could overshoot its projections, something we never saw in the years of deflation. Inflation in Japan is much lower than in the US or UK, where the central banks have had to tighten policy in order to deal with what has inflation, which has become Enemy Number One. The global wave of inflation, which has seen energy and raw material costs soar, has also reached Japan, and the increase in inflation has forced the BoJ to pay attention to the new phenomenon of rising inflation. For the fiscal year starting in April, the BoJ is projecting inflation of 1.1% up from the 0.9% gain it forecast in October. Last week, Reuters reported that the BoJ is considering the eventuality of having to raise interest rates even if inflation does not reach the bank's two percent target. The BoJ's ultra-accommodative policy won't be changed anytime soon and inflation still remains below 2%. Still, it is noteworthy that for the first time in years the BoJ is addressing inflation concerns, and that could eventually lead to a shift in policy. There is resistance at 115.54, followed by 116.88 There is support at 113.18 and 112.16
by OANDA