10 May 2024, USD/JPY
USDJPY:
USDJPY is trading near 155.70 on Friday in the early hours of Asian trading. Renewed demand for the US dollar (USD) is lifting the pair. However, verbal intervention and hawkish commentary from Bank of Japan (BOJ) Governor Kazuo Ueda may limit the decline in the Japanese Yen (JPY) for now.
San Francisco Fed President Mary Daly said Thursday that the central bank may need more time to bring inflation back to target as uncertainty about inflation over the next few months has increased. Other Fed officials this week also indicated they favored keeping rates at current levels for longer. This, in turn, could lead to a stronger dollar and create a tailwind for USD/JPY.
Financial markets expect the US central bank to hold policy for the rest of the year as it seeks "greater confidence" in inflation, with Fed Chairman Jerome Powell emphasizing that it may take longer than expected to achieve that confidence."
Bank of Japan Governor Kazuo Ueda said on Thursday that the central bank will scrutinize the yen's recent weakness when setting monetary policy, according to Reuters. The hawkish comments raised expectations of higher short-term borrowing costs in the coming months, which provided some support for the Japanese yen and led to a decline in USD/JPY yesterday. Verbal intervention from the Japanese authorities is likely to limit the pair's near-term gains. Early Friday, Japan's Finance Minister Shunichi Suzuki once again said that he would take necessary measures against the foreign currency if necessary.
Trading recommendation: Trade mainly with Buy orders from the current price level
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