The Japanese yen has held near a one-week low against the US dollar | 23 January 2025

USDJPY:

The Japanese yen (JPY) rose during the Asian session on Thursday following the release of better-than-expected Japanese trade balance data, although it remains close to a one-week low against its US counterpart from the previous day.The Bank of Japan (BoJ) is expected to raise interest rates imminently, a prospect which continues to support the yen. Additionally, the Federal Reserve's (Fed) anticipated interest rate cuts this year are a factor in the subdued US Dollar (USD) price action, which is limiting the USD/JPY pair's recovery from a more than one-month low reached on Tuesday.

Nevertheless, JPY bulls seem reluctant to take a risk and prefer to adopt a wait-and-see approach ahead of the crucial two-day Bank of Japan meeting that starts this Thursday. Concerns over US President Donald Trump's tariff plans and risk-on sentiment may also deter further yen appreciation, but the diverging policy expectations of the BoJ and Fed require some caution before confirming that the USD/JPY pair has formed a short-term bottom.Traders now await Trump's speech at the World Economic Forum to build momentum ahead of the expected BoJ decision on Friday.

Trade recommendation: Watching the level of 156.50, trading mainly with Buy orders

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