Japanese Yen rises for third session

The Governor of the Bank of Japan has affirmed that the Japanese economy is witnessing a moderate recovery.

By Raed Alkhedr | @raedalkhedr | 28 November 2023

USDJPY Technical Analysis 1
  • Bank of Japan Governor's remarks boost Japanese currency

  • Rising inflation pressures on policymakers

  • Positive expectations for wage growth in Japan

Key economic developments impacting Japanese Yen trends

The Japanese yen continues to exhibit strength against major currencies, marking its third consecutive session of gains against the US dollar, fueled by insights shared by the Governor of the Bank of Japan.

Governor Kazuo Ueda acknowledged the formidable challenge in achieving the Bank of Japan's 2% inflation target on a sustainable basis. Market anticipation of an adjustment in the accommodative monetary policy has heightened due to persistent inflationary pressures, deviating from the Bank of Japan's set target. Consequently, the Japanese yen has demonstrated resilience against its counterparts.

Ueda emphasized a moderate recovery in the Japanese economy, citing positive signs in both wages and inflation. The increasing inflationary pressures, evident in consumer price data, might prompt a reconsideration of the bank's highly accommodative policy and negative interest rates.

The latest Corporate Services Price Index data disclosed a notable 2.3% year-on-year increase in October, surpassing the anticipated 2.1% rise and exceeding the 2.0% increase recorded in September.

In the currency markets, the USD/JPY pair commenced the day with a decline against the Japanese yen, presently hovering near the 148.40 level.

Notable technical levels impacting USD/JPY movements

Attempts by the USD/JPY pair to breach the resistance at 149.50 proved futile, resulting in a retracement from that level. The current trading position rests around 148.40, with indications suggesting a potential continuation of this retracement, testing the support at 147.50. A break and sustained trading below this level could contribute to further downward momentum, possibly testing the subsequent support at 146.20. A decisive break below this level may extend the decline towards 144.70.

Conversely, a successful breach of the resistance at 149.50, coupled with sustained prices above it, might trigger additional upward momentum, testing resistance levels at 150.60. Further breakthrough could propel the pair towards the 151.80 level.

USDJPY 28-11-2023