- USD/JPY fell 30 pips on BoJ’s Kuroda yen comments.
- A bearish market mood lifts the dollar’s outlook and the yen is under pressure.
- Fed speech lifts US yields and the US dollar.
- USD/JPY Price Forecast: Bullish bias, but could be subject to a mean reversion move, with RSI overbought.
The USD/JPY advances for the third day in a row, despite yen-related comments from Bank of Japan (BoJ) Governor Kuroda, who stated that “currency movements are somewhat fast”, causing a drop of 30 pips at par, though it bounced back. lately because of the overall strength of the US dollar. At time of writing, USD/JPY is trading at 123.58.
In addition, a bearish market sentiment keeps the dollar firm. European stocks were mixed at the close, while US stocks fell, while US yields and the US dollar rose on comments from the Fed speaker, hinting at the US central bank’s move. The US would raise rates and could start reducing its balance sheet at the May meeting.
On top of that, the problems between Russia and Ukraine sum up the bad mood of investors. Europe announced a new tranche of sanctions on Russia, led by Germany and France, which expelled Russian diplomats in response to Russian military atrocities in Bucha.
Meanwhile, the US and the G7 are coordinating new sanctions against Russia, expanding sanctions against financial institutions, state-owned companies in Russia, and unspecified Russian officials and their relatives.
Fed Politicians Dominate Headlines
Earlier, Fed Governor Lael Brainard said the Fed “stands ready to take stronger action if inflation and inflation expectations suggest a need to do so.” He added that the balance could reduce his balance in May.
Along the same lines, Kansas City Fed President Esther George (2022 voter) said a 50bp move would be an option as conditions favor going faster than before. Later, San Francisco Fed President Mary Daly commented that the labor market is extremely tight and noted that the Fed is on track to raise rates. Daly added that growth would slow, but she hoped it would be a short-lived event.
USD/JPY Price Forecast: Technical Outlook
USD/JPY maintains an uptrend. However, it is worth noting that the RSI at 73.90 in overbought conditions reacted less strongly to the upside on the rally towards current prices, meaning USD/JPY could be subject to a move. mean reversion.
However, the uptrend remains intact unless USD/JPY breaks below 121.27. That said, the first resistance for USD/JPY would be 124.00. A breakout of the latte would expose strong supply zones such as 124.30, followed by the yearly high at 125.10.
Technical levels
Source: Fx Street
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