- Recent attempts to break the upward trend of the USD/JPY currency pair failed.
- The currency pair fell to the support level of 149.20 last week after signals of a possible abandonment of negative Japanese interest rates.
- The USD/JPY currency pair quickly recovered to the resistance level of 150.72 last Friday before closing weekly trading around the psychological resistance of 150.00.
This week, the US dollar pairs will be on high alert with the reaction to the testimony of US Federal Reserve Governor Jerome Powell for two days, ending with the announcement of the US employment figures next Friday.
On the other hand, Tokyo inflation figures for February are likely to show a strong rise as the impact of subsidies fades a year ago. This could fuel bets on a March rate hike by the Bank of Japan at a time when the Labor market is tightening. Board member Junko Nakagawa will provide the latest signals from the central bank on Thursday. Also from Japan, the Japanese government is officially discussing announcing that the country's economy has overcome deflation, Kyodo News reported on Saturday, citing several people familiar with the matter. The government will consider making the statement after considering this year's wage negotiations to see if wages are rising in line with rising prices, the report said. Kyodo reported that the proposal includes Japanese Prime Minister Fumio Kishida and other cabinet members publicly saying that the country has emerged from deflation at meetings and press conferences, and in addition to mentioning it in monthly economic reports.
Generally, financial markets are closely monitoring the timing of the next interest rate increase by the Bank of Japan, which will be the first since 2007. For his part, Bank of Japan Governor Kazuo Ueda recently said that the target rate was not yet in sight, and the central bank will continue to check this whether the virtuous cycle between wages and prices has begun to shift. Japan's record inflation beat estimates in January, with consumer prices excluding fresh food rising 2% from a year earlier. This was the 22nd straight month in which inflation met or exceeded the country's central bank target. Meanwhile, the country's Labor market remained tight in the same month, keeping pressure on companies to promise strong wage gains in annual wage negotiations with trade unions.
According to the Kyodo report, the Japanese government will consider the CPI and other key economic data when making the decision.
USD/JPY Technical analysis and Expectations Today:
According to the performance on the daily chart above, the price of the US dollar against the Japanese yen “USD/JPY” is still on its upward path with momentum from the psychological resistance of 150.00. Moreover, if Jerome Powell’s statements are tough regarding the future of the US interest rate hike and the US job numbers come stronger than all expectations, bulls may find the opportunity to move the price of the currency pair US Dollar against the Japanese Yen (USD/JPY) to the resistance levels of 150.85 and 151.60. Finally, the technical indicators will move towards strong overbought levels. Comments are increasing about the imminent Japanese intervention in the markets to prevent further collapse of the currency price.
In contrast, the support level of 148.80 will be the beginning of breaking the general upward trend for the dollar pair against the Japanese yen.
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