At the beginning of this trading week, the USD/JPY exchange rate held steady around the resistance level of 157.00. The yen had recovered slightly to about 156.7 against the dollar, bouncing back from its lowest point in over three weeks. This was in response to recent statements from Bank of Japan officials. Bank of Japan Governor Kazuo Ueda emphasized the need to re-anchor inflation expectations and highlighted the challenge of accurately estimating the neutral interest rate in Japan.
Meanwhile, Bank of Japan Deputy Governor Shinichi Uchida mentioned that the end of the battle against deflation is within sight and suggested that wages are likely to continue increasing. However, the Japanese yen faced pressure after data revealed a slowdown in Japan’s core inflation rate to 2.2% in April from 2.6% in March, primarily due to moderate food inflation. Additionally, the key rate dropped to 2.5% in April from 2.7% in March for the second consecutive month. External factors like strong US economic data and hawkish Federal Reserve meeting minutes also weighed on the yen.
In the global markets, European and Asian stock markets saw modest gains, with the German DAX and CAC 40 indices showing positive movement. The Nikkei 225 in Tokyo and the Kospi in Seoul also experienced gains, while the Shanghai Composite Index reported an increase in corporate profits year-on-year. Hong Kong’s Hang Seng index, Taiwan, and South Korea saw positive momentum as well.
In the US market, the S&P 500 index recovered from losses in the previous days, with slight gains for the week. The Dow Jones and Nasdaq Composite also showed positive movement, surpassing previous records.
Looking at the technical analysis of the USD/JPY exchange rate, the general trend remains upward. Resistance levels are at 157.60 and 158.40, with the potential for a shift to a downward trend in the event of Japanese intervention to prevent further depreciation of the currency.
Overall, the market outlook for USD/JPY remains positive, but potential interventions could impact the currency’s direction in the short term. If you are interested in trading based on our Forex daily forecast, consider choosing one of the top forex brokers in the industry.