The Japanese yen continues to strengthen against the US dollar. | 13 January 2025

USDJPY:

The Japanese yen (JPY) rose against its US counterpart for the third consecutive day on Monday and is moving away from the multi-month low reached last week. The risk-off impulse, reflected in weakening sentiment in stock markets, is a key factor supporting the safe-haven Japanese Yen. However, doubts over the Bank of Japan's rate hike plans should limit the yen's upside.

Rising inflationary pressures in Japan leave the door open for another BoJ rate hike in January or March. Nevertheless, some investors believe that the BoJ may wait until April for confirmation that the strong pace of wage growth will continue into the spring talks. In addition, the recent widening of the yield differential between the US and Japan may also contribute to the depreciation of the Japanese Yen.

In addition, bullish sentiment around the US Dollar (USD), fuelled by expectations that the Federal Reserve (Fed) will pause its rate cut cycle, should serve as a tailwind for USD/JPY. In the absence of any significant economic releases, the mixed fundamental backdrop calls for caution before positioning for further JPY strength.

Trade recommendation: Watch the level of 158.80, when fixing above consider Buy positions, when rebounding consider Sell positions.

Connect Drawdown bonus 101% and trade with double your deposit! Bonus funds will help you increase your profits or withstand a sudden drawdown!