In the foreign exchange market, the Japanese Yen (JPY) experienced a modest weakening against its American counterpart on Thursday, stepping back from a one-week high reached in the previous session. This retreat comes as global risk sentiment receives an additional boost following the People’s Bank of China‘s announcement of monetary stimulus measures. The move, coupled with a recent widening of the US-Japan rate differential, has dampened the safe-haven appeal of the JPY, propelling the USD/JPY pair towards the 148.00 mark during the early European session.
Despite the decline, the downside for the JPY is capped by the Bank of Japan‘s (BoJ) hawkish stance, indicating a potential phase-out of stimulus measures and negative interest rates. However, geopolitical tensions in the Middle East and the uncertain global economic outlook continue to support the safe-haven JPY, placing a limit on the USD/JPY pair’s gains. Additionally, subdued US Dollar (USD) price action prevents traders from making aggressive bullish bets on the pair.
Investors exhibit caution ahead of crucial US macro releases, including the Advance Q4 GDP print, Durable Goods Orders, Weekly Initial Jobless Claims, and New Home Sales data. The Tokyo Core CPI report during the Asian session will also be closely monitored, with particular attention on the US Personal Consumption Expenditures (PCE) Price Index, which could influence future Federal Reserve policy decisions.
Market Movers Summary:
The Japanese Yen moves away from a one-week high, influenced by a positive risk tone despite a softer USD.
The People’s Bank of China’s stimulus measures contribute to the upbeat market sentiment.
The yield on the 10-year US government bond rises, supporting the US Dollar and the USD/JPY pair.
Positive US data, including a 15-month high in the S&P Global flash US Manufacturing PMI, strengthens the USD.
Bank of Japan’s hawkish tilt and supportive comments from business leaders suggest a shift in monetary policy.
US economic docket features key releases, with a focus on the Advance Q4 GDP report and inflation figures.
Technical Analysis:
From a technical standpoint, the USD/JPY pair shows repeated rebounds above the 100-day Simple Moving Average (SMA), indicating an upward bias. Resistance is expected near 148.00 and the 148.20-148.25 region, followed by 148.80. Further bullish momentum could target 149.30-149.35 and the psychological mark of 150.00.
On the downside, the 100-day SMA around 147.55 acts as support, with additional buying interest near 147.00 and 146.45. A breach of this support could shift the bias in favor of bears, targeting 146.10-146.00, followed by 145.30-145.25 and the psychological level of 145.00.
