- The Japanese Yen strengthens a bit in reaction to verbal intervention by Japanese authorities.
- The risk-off impulse further benefits the safe-haven JPY and exerts some pressure on USD/JPY.
- The hotter-than-expected US CPI reaffirms hawkish Fed expectations and favours the USD bulls.
The Japanese Yen (JPY) draws support from a combination of factors and sticks to its modest intraday gains against the US Dollar (USD) heading into the European session on Monday. A turnaround in the global risk sentiment, along with verbal intervention by Japanese authorities, provided a goodish lift to the safe-haven JPY. Apart from this, a modest US Dollar (USD) downtick drags the USD/JPY pair away from a two-month peak touched the precious day.
Any meaningful USD corrective slide from its highest level since November 14 seems elusive in the wake of expectations that the Federal Reserve (Fed) will keep interest rates higher for longer, bolstered by a stronger US CPI report on Tuesday. The hawkish outlook remains supportive of elevated US Treasury bond yields, widening the US-Japan rate differential, which should cap the JPY and further contribute to limiting the downside for the USD/JPY pair.
Daily Digest Market Movers: Japanese Yen sticks to gains amid intervention fears, lacks follow-through
- The Japanese Yen trims a part of Tuesday’s post-US CPI fall to a three-month low after Japan’s top currency diplomat Masato Kanda reiterated that authorities stand ready to take steps in the FX market if needed.
- Furthermore, Japan’s Finance Minister Shunichi Suzuki said that rapid FX moves are undesirable and that the government is watching the market with even stronger urgency, though made no comments on intervention.
- According to Bloomberg, no politicians, government officials, bankers or business leaders have voiced strong opposition to the Bank of Japan Governor Kazuo Ueda’s idea to raise rates for the first time since 2007.
- A hotter-than-expected US inflation report cooled expectations for a more aggressive rate-cutting cycle by the Federal Reserve, pushing US Treasury bond yields higher and tempering investors’ appetite for riskier assets.
- The Labor Department’s Bureau of Labor Statistics reported on Tuesday that the headline US CPI rose by 0.3% in January as compared to the 0.2% previous and softened to the 3.1% YoY rate from the 3.4% in December.
- The reading was above market expectations for a reading of 2.9% and was accompanied by stronger Core CPI print, which rose 3.9% during the reported month, matching December’s increase and surpassing estimates for 3.7%.
- Investors have all but priced out a March rate cut and the possibility for a move in May has declined to around 35% from over 60% the previous day, while the Fed is now expected to start cutting rates at the June policy meeting.
- The yield on the benchmark 10-year US government bond reached its highest level since December 1 and lifted the US Dollar to a three-month peak, supporting prospects for a further appreciating move for the USD/JPY pair.
Technical Analysis: USD/JPY bulls have the upper hand, corrective slide could be seen as buying opportunity
From a technical perspective, the overnight strong move-up was seen as a fresh trigger for bulls and might have already set the stage for additional gains. That said, the Relative Strength Index (RSI) on the daily chart is hovering close to the overbought zone and warrants some caution. Any further corrective slide, however, is likely to attract fresh buyers near the 150.30 area, which should limit losses for the USD/JPY pair near the 150.00 mark. The latter should act as a key pivotal point, which if broken might prompt some technical selling and drag spot prices further towards the 149.65-149.60 region.
On the flip side, the 150.90 area, or a multi-month peak touched on Tuesday, now seems to act as an immediate hurdle. A sustained strength beyond could lift the USD/JPY pair further towards the 151.45 intermediate hurdle en route to the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.
Japanese Yen price today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.03% | 0.02% | 0.01% | -0.02% | -0.08% | -0.03% | -0.02% | |
| EUR | -0.01% | 0.00% | 0.00% | -0.03% | -0.10% | -0.02% | -0.03% | |
| GBP | -0.02% | 0.00% | 0.00% | -0.02% | -0.09% | -0.04% | -0.03% | |
| CAD | -0.01% | 0.00% | 0.00% | -0.03% | -0.09% | -0.04% | -0.04% | |
| AUD | 0.00% | 0.03% | 0.03% | 0.03% | -0.07% | -0.01% | -0.01% | |
| JPY | 0.08% | 0.08% | 0.08% | 0.10% | 0.05% | 0.07% | 0.05% | |
| NZD | 0.03% | 0.04% | 0.04% | 0.04% | 0.04% | -0.05% | 0.02% | |
| CHF | 0.02% | 0.04% | 0.04% | 0.04% | 0.04% | -0.05% | 0.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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