Fundamental Analysis

  • USD/JPY rose to the upper 156 range after reports that Prime Minister Takaichi was reluctant about an early rate hike. However, speculation of a possible rate hike at the Bank of Japan’s March meeting quickly emerged, causing the pair to lose momentum. It is now trading around 156 with limited direction. While RSI remains above 50 and support is seen near the 52-day moving average, the market remains volatile amid shifting monetary policy expectations, though the broader bias still leans toward yen weakness.

Fundamental Analysis

Reports that Prime Minister Sanae Takaichi expressed reluctance toward an early rate hike pushed USD/JPY up to the upper 156 range. The market also reacted to speculation surrounding Bank of Japan policy board appointments, particularly the possibility of selecting a reflation-oriented member who supports aggressive fiscal policy. This scenario, often associated with “Takaichi economics,” tilted expectations toward yen weakness, while bank stocks declined sharply.

However, the following day, speculation suddenly intensified regarding a potential rate hike at the Bank of Japan’s March policy meeting.

USD/JPY is currently trading around 156, with price action constrained in both directions. RSI remains above 50, and the descending trendline is functioning as support.

Although the market remains difficult to navigate, the broader outlook still appears tilted toward yen weakness. A shift from a hawkish member to a reflation-oriented member could support Prime Minister Takaichi’s expansionary fiscal stance.

USD/JPY – Daily Chart

The 10-day and 52-day moving averages are converging.

USD/JPY is moving without clear direction. The proximity of the 10-day and 52-day moving averages suggests that the market is undecided on whether the BOJ will implement an early rate hike or maintain its current stance.

A lower shadow has formed near the 52-day moving average, so for now, a bullish bias may be preferable during the New York session.

Proposed trade setup:
Entry around 156.18
Take profit near 156.65
Stop loss at 155.75

USD/JPY – 1-Hour Chart