USD/JPY carves lower highs and lows ahead of the Bank of Japan (BoJ) interest rate decision as it slips to a fresh monthly low (154.78).
By : David Song, Strategist
Japanese Yen Outlook: USD/JPY
USD/JPY carves lower highs and lows ahead of the Bank of Japan (BoJ) interest rate decision as it slips to a fresh monthly low (154.78).
USD/JPY Slips to Fresh Monthly Low Ahead of BoJ Rate Decision
USD/JPY may continue to give back the advance from the December low (148.65) as it no longer trades within the opening range for January, and swings in the carry trade may influence the exchange rate as the Federal Reserve appears to be on track to further unwind its restrictive policy.
Join David Song for the Weekly Fundamental Market Outlook webinar.
Japan Economic Calendar
Meanwhile, the BoJ is expected to deliver a 25bp rate-hike at its first meeting for 2025 after removing its negative interest rate policy (NIRP) last year, and the central bank may continue to normalize monetary policy as ‘Japan’s economy is likely to keep growing at a pace above its potential growth rate.’
With that said, speculation surrounding BoJ policy may influence the carry trade as the Japanese Yen serves as a funding-currency, but the recent decline in USD/JPY may turn out to be temporary should Governor Kazuo Ueda and Co. show little intentions of pursing a rate-hike cycle.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY trades to a fresh monthly low (154.78) after struggling to trade/close back above 156.50 (78.6% Fibonacci extension), and a break/close below 153.80 (23.6% Fibonacci retracement) may push the exchange rate towards 151.95 (2022 high).
- Next area of interest comes in around 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension), but USD/JPY may attempt to retrace the decline from the start of the week should it struggle to extend the recent series of lower highs and lows.
- Need a close above 156.50 (78.6% Fibonacci extension) to bring the monthly high (158.88) on the radar, with a reach above 160.40 (1990 high) bringing the 2024 high (161.95) on the radar.
Additional Market Outlooks
USD/CAD Spikes to Fresh Monthly High as Trump Prepares Canada Tariff
GBP/USD Pullback Pushes RSI Toward Oversold Territory
AUD/USD Vulnerable amid Struggle to Push Above Weekly High
USD/CHF Snaps Bearish Price Series to Hold Above Weekly Low
— Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Click the website link below to read our Guide to central banks and interest rates in 2025
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.