February 2, 2023

USD/JPY Surges to Daily Highs, Approaching 130.00

  • USD-JPY accumulates additional steam to trade near the 130.0 level.
  • Japanese yields improve alongside the dollar’s rebound.
  • Japan’s inflation stretched the upsurge in December.

Continued selling momentum around the JPY sees the USD-JPY pair climbing to a new daily peak ending the week near the territory of the crucial 130.00 obstacle.

USD-JPY Eyes Dollar, Yields

USD-JPY maintains a choppy price action today (Friday), leaving the previous daily dips and reclaiming composure at around 130.00. Such developments saw the greenback staging an attractive bounce as the yields soared much higher.

Meanwhile, the United States ten-year yields are near the 3.45% mark, whereas their Japanese counterparts leave two daily dips to regain the 0.40% obstacle. That comes as the impacts from BoJ’s dovishness (18 January) continue to fade.

Japanese docket data shows the headline inflation and the core inflation surged 4.0% Y/Y to December, whereas the inflation rate baring energy and food climbed by 3% from the past year.

What to Evaluate in JPY?

USD-JPY’s three-month negative spree witnessed initial support at the 127.20 mark on 16 January. In the meantime, the pair continues to follow developments from the Federal’s normalization procedure and markets’ opposing views – favoring a near-term pivot – and FOMC governors’ hawkishness, which defends rapid rates increase (5- 5.25%).

In a domestic case, market players will likely track hints from the Bank of Japan showing possible exit strategies from the present ultra-accommodative policy or/and another YCC (Yield Curve Control) tweak.

USD-JPY – Levels to Consider

The pair displayed a 0.88% gain at 129.53 during this publication, staring at the immediate upside barrier of 131.57 – 18 January weekly peak), then 134.77 (6 January high) before hitting the resistance at the 200-day Simple Moving Average at 136.69. Nonetheless, breaking beneath the 16 January low of 127.21 would clear the path to 126.36 (May 2022 low) before eventually touching 121.27 (31 March 2022 weekly low).

After United Kingdom retail sales, the market will see Canada’s retail sales while the United States waits for home sales figures. Moreover, most Asian markets will remain closed on Monday due to the Chinese New Year.

Leave a Reply

Your email address will not be published. Required fields are marked *