The Japanese Yen (JPY) is recovering slightly from its lowest level in nearly two weeks, touching against the broadly firmer US Dollar (USD) earlier this Monday, although retaining its negative bias heading into the European session. Speculation that the Japanese authorities may intervene to stop further weakness in the local currency prevents speculators on the Japanese yen from placing strong bets. In addition, divergent policy outlooks of the Bank of Japan (BoJ) and the US Federal Reserve (Fed) are helping limit losses for the low-yielding Japanese yen.
However, the lack of a clear timeline for future interest rate hikes by the Bank of Japan may continue to undermine the Japanese yen. Moreover, rising geopolitical risks benefit the US dollar’s reserve currency status and become another factor contributing to the relatively weak performance of the Japanese yen, helping USD/JPY to hold above the 157.00 level. Traders are now looking to this week’s key US economic data, due at the start of a new month, for signs of a Fed rate cut and some helpful momentum.
JPY bulls are ignoring interest rate hike bets from the Bank of Japan and intervention fears
- The Bank of Japan raised its benchmark interest rate to a 30-year high of 0.75% in December and signaled that the size of future adjustments would depend on economic conditions. Moreover, the Bank of Japan is expected to begin comprehensive talks on implementing an additional rate hike if strong wage increases are confirmed at this year’s Shinto negotiations in the spring, sources familiar with the matter said.
- However, investors appear dissatisfied and remain uncertain about the pace of tightening amid bets that energy subsidies, stable rice prices and lower oil costs will keep inflation low until 2026. This continues to undermine the Japanese yen for a fourth straight day, which, coupled with a broadly stronger US dollar, is lifting the USD/JPY pair beyond the 157.00 mark on Monday.
- The US Army’s Delta Force – an elite special forces unit – attacked Venezuela and captured its president, Nicolas Maduro, along with his wife, on Saturday. This comes on top of the lack of progress on the peace deal between Russia and Ukraine, the unrest in Iran, and the issues surrounding Gaza, which keep geopolitical risks alive and benefit the US dollar’s status as a global reserve currency.
- The US dollar reached a two-week high, although the upside appears limited amid speculation that the US Federal Reserve will cut borrowing costs in March and perhaps deliver another interest rate cut later this year. Moreover, concerns about the independence of the Federal Reserve, especially under the administration of US President Donald Trump, could act as a headwind for the currency and keep the lid on the USD/JPY pair.
- Moreover, the Fed’s dovish outlook represents a significant contrast compared to expectations of further monetary policy normalization by the Bank of Japan. Aside from this, speculative intervention would help limit losses in the low-yielding Japanese yen. This in turn calls for some caution before placing strong bullish bets on USD/JPY and positioning for further gains.
- Traders are now looking to important US macroeconomic indicators, due at the start of the new month, for further signals on the path to Fed rate cuts and some beneficial momentum. A fairly busy week begins with the release of the US ISM Manufacturing PMI later on Monday and culminates in the closely watched US monthly non-farm payrolls report on Friday.
A constructive setup for USD/JPY indicates that a corrective pullback is likely to be bought
The 200-period simple moving average continues to rise, and USD/JPY is holding above it, reinforcing the bullish bias. The Moving Average Convergence-Divergence (MACD) line stands above the signal line and lies marginally in positive territory, with the histogram rising, indicating strengthening momentum. The 200 period simple moving average at 156.04 is acting as immediate dynamic support.
The RSI at 64.83 remains bullish without overbought conditions, reinforcing the bullish tone. Momentum will continue as USD/JPY remains above the bullish 200-SMA, and a close below it could shift the bias towards consolidation.
(Technical analysis of this story was written with the help of an artificial intelligence tool)
Japanese Yen price in the last 7 days
The table below shows the percentage change of the Japanese Yen (JPY) against the major currencies listed in the last 7 days. The Japanese yen was the strongest against the New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.69% | 0.39% | 0.31% | 0.74% | 0.28% | 1.24% | 0.68% | |
| euro | -0.69% | -0.30% | -0.39% | 0.04% | -0.41% | 0.55% | -0.02% | |
| GBP | -0.39% | 0.30% | 0.06% | 0.34% | -0.11% | 0.85% | 0.28% | |
| JPY | -0.31% | 0.39% | -0.06% | 0.46% | -0.01% | 0.93% | 0.38% | |
| Canadian | -0.74% | -0.04% | -0.34% | -0.46% | -0.40% | 0.42% | -0.06% | |
| Australian dollar | -0.28% | 0.41% | 0.11% | 0.01% | 0.40% | 0.96% | 0.39% | |
| New Zealand dollar | -1.24% | -0.55% | -0.85% | -0.93% | -0.42% | -0.96% | -0.56% | |
| Swiss franc | -0.68% | 0.02% | -0.28% | -0.38% | 0.06% | -0.39% | 0.56% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent the Japanese Yen (base)/US Dollar (quote).
