- USD/JPY continues its rise and surpasses the 154.00 level, driven by good economic data from the US and risk aversion arising from tensions in the Middle East.
- Strong March US retail sales highlight the strength of consumption, pushing up US Treasury yields.
- Japanese authorities express concern about rapid currency fluctuations and remain in close contact with global partners on developments in financial and currency markets.
The US Dollar extended its gains against the Japanese Yen in early trading of the North American session, surpassing the 154.00 level, although Japanese officials remain wary of the currency's rapid advance. However, the USD/JPY pair is trading at 154.37, up 0.71, updating 34-year highs.
US Dollar Strengthens Against Yen, Despite Verbal Intervention from Japanese Officials
Over the weekend, events in the Middle East spurred risk aversion in financial markets. By remaining closed, Bitcoin was the biggest loser, although it has trimmed some of the losses inflicted on risk appetite. Iran's offensive against Israel ended without casualties, although Tehran made clear that it would not stand by if Israel escalated the conflict.
According to Bloomberg, some US officials who spoke on the condition of anonymity said the White House is urging Israel not to retaliate.
Aside from these developments, economic data from the United States (US) sponsored the USD/JPY latest leg-up, although it remains shy to break the 155.00 level.
The US Department of Labor revealed that retail sales in March rose 0.7% month-on-month, above expectations of 0.4%. This shows an increase of 2.1% in the first quarter of 2024 compared to the first quarter of last year, an indication of consumer strength.
Following the data, US Treasury yields soar, with the short and long end of the curve rising more than 10 basis points (bps).
Fed's John Williams expects cuts in 2024
Meanwhile, New York Fed President John Williams says his baseline sees rate cuts “likely beginning this year,” and calls policy restrictive, adding that strong fundamentals are driving the consumer spending.
On the Japanese front, officials continue to insist that rapid currency movements are undesirable and must reflect fundamentals. Recently, a senior official from the Japanese Ministry of Finance stated that they maintain frequent and regular conversations with US and other authorities about movements in the financial and currency markets.
USD/JPY Price Analysis: Technical Outlook
From a technical point of view, the rally in USD/JPY could continue if it were not for the warnings from the Japanese authorities, which put a stop to the bullish trend. If the pair stays higher, it could test 155.00, seen as the sand line that could increase tension in the majors, and could trigger intervention by the authorities. Conversely, if USD/JPY falls below 154.00, a test of the April 12 high turned support is expected at 153.39, followed by 153.00.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
