The dollar gained against the Japanese yen yesterday. The Yen weakens to the day’s low 133.64 against the dollar. After Japan’s new central bank governor Kazuo Ueda said, it was appropriate to maintain the bank’s ultra-loose monetary policy for now as inflation has yet to hit 2% as a trend.
The greenback was last up 1.30% at 133.64 yen, the highest since April 3.
During his inauguration speech, Ueda ruled out any major policy shift. And said that they want to avoid a sudden normalization in monetary policy as it would cause a big impact on markets. This, in turn, weighs heavily on the Japanese Yen (JPY) and provides an additional boost to the USD/JPY pair.
Further, a solid jobs report for March on Friday added to expectations that the Federal Reserve will hike rates again in May also weighed on sentiment.
U.S. employers maintained a strong pace of hiring in March, adding 236,000 jobs, pushing the unemployment rate back down to 3.5% and signaling labor market resilience that will keep the Federal Reserve on track to raise interest rates one more time next month.
Moreover, worries about a deeper global economic downturn, heightened US-China tensions over Taiwan tempers investors’ appetite for riskier assets.
Technical View – USDJPY at previous swing high 133.7860
On the daily chart, the USDJPY pair rebounded from the day’s low of 131.8340 and settled at 133.620, up 1.11%. Highest intraday gains since 29 March 2023.
Intraday price action resulted in formation of a long bullish candlestick. Which is indicating for a bullish momentum in near future. However, the pair would need to break above 133.7880. Its previous consolidation resistance in order to test the next resistance 135.20-135.85.
Adding to this, the pair is trading its 200 DMA. A break above it appears to gain nearly 2-3% in days to come.
Alternatively, on the downside, crucial support is seen at 131.90 below 130.70-130.20.
Overall trend is expected to remain bullish on USDJPY. Following the above technical aspects as well as recent dovish comments from BOJ Governor.