Japanese Yen weakens amid BOJ Governor jitters. And the extension of the bank’s ultra-loose monetary policy has witnessed a speculative move in Japanese Yen.
Since the start of the year, USD/JPY pair jumped from the low of January 2023 (127.215). It jumped towards its recent high 134.809, almost 3.55%.
The Japanese yen sank against the dollar. As markets speculated over the next Bank of Japan Governor and the extension of the bank’s ultra-loose monetary policy.
Media reports suggested that the Japanese government could nominate a successor to current BOJ governor Haruhiko. Kuroda as soon as this week. But the main point of focus was on whether the central bank’s will maintain ultra-loose monetary policy. Under the new management.
A reports suggested that economist Kazuo Ueda. A perceived outsider to Japan’s political establishment. who will be nominated as the governor. But Ueda.
Adding to this, a widening divergence between Japanese and U.S. interest rates had weighed heavily on the yen through 2022. This, coupled with increasing raw material costs, saw inflation shoot up to over 40-year highs during the year.
With inflation now trending at twice the BOJ’s annual 2% target. Speculation is rife over when the BOJ could begin tightening policy. The central bank had unexpectedly widened the band within. Which it allows yields on benchmark government bonds to trade in December, ratcheting up hopes for more tightening.
But it then ducked expectations for more measures in January, which in turn spurred increased volatility in local markets.
Moreover, Japanese stocks also sank in recent sessions on fears of a potential end to the BOJ’s accommodative stance, which had seen local stocks enjoy nearly a decade-long high-liquidity environment.
Technical View- USD/JPY at massive resistance will it break?
On the daily chart, USD/JPY pair is trading on a verge of massive resistance 134.80, which coincides with 100 SMA. A break above it will lead new bullish momentum and USD/JPY could test 135.75-136.20 next resistance.
Further, USD/JPY is trading above 23.6% Fibonacci Retracement, of its previous downward swing. This is also signaling for upside move toward 136.50 which is 38.2% its next retracement.
Overall sentiment still looks bullish in the USD/JPY pair. But, Bank of Japan jitters will only change the Japanese Yen trend.