Fundamental Analysis

  • Both the Federal Reserve and the Bank of Japan signaled hawkish stances, emphasizing inflation concerns. The BOJ’s focus on inflation over economic growth strengthened expectations of tightening, leading USD/JPY to decline to the low 159 range. Technically, the 10-day moving average is acting as support, but a break below could push the pair toward 157. Despite short-term downside risks, the broader trend of yen weakness is expected to continue due to high energy prices.

Hawkish Press Conferences from Both the Fed and BOJ

A press conference by the Federal Reserve Chair was held early in the day, followed by a press conference by the Bank of Japan Governor in the afternoon. Both officials expressed strong concerns about inflation driven by geopolitical tensions in the Middle East and rising oil prices. Both appeared to lean toward a hawkish stance, suggesting further monetary tightening.

BOJ Governor Ueda indicated that the Bank would maintain its rate hike stance even if economic growth slows, as long as underlying inflation continues to rise. This signals a policy shift prioritizing inflation control over economic growth, which the market is likely to interpret as hawkish.

Following the press conferences, USD/JPY moved lower, trading in the low 159 range. The 10-day moving average is currently acting as a support level, and the pair continues to move along a regression trend, indicating ongoing consolidation. The 160 level remains a strong resistance, and today’s BOJ conference appears to have restrained further yen weakness.

If the pair breaks below the 10-day moving average, it could decline toward the 157 level. However, as long as energy prices remain elevated, the broader trend of yen depreciation is expected to persist. Buying on dips is considered a favorable strategy.

[USD/JPY / Daily Chart]


 USD/JPY declined after the press conferences.

Following the BOJ press conference, USD/JPY dropped from the high 159 range to the low 159 range. The overall hawkish tone, with a focus on inflation over economic conditions, influenced the move.

On the hourly chart, USD/JPY has broken below the 90-period moving average.
Based on Fibonacci retracement levels, the 158 and 157 levels are key price zones to watch. Attention should be paid to price action during the New York session today.