The USD/JPY currency pair has been hovering around 151.28 during the North American trading session, with traders expressing caution due to concerns over potential Japanese government intervention to support the Yen.
Market Sentiment
The broader market sentiment is mixed, as evidenced by thin liquidity trading towards the end of the first quarter.
US Economic Data
Recent US economic data has painted a picture of a robust economy:
- Q4 GDP growth exceeded expectations at 3.4%.
- Initial Jobless Claims were lower than anticipated, indicating a tight labor market.
- Consumer Sentiment rose to its highest level since July 2021.
- Pending Home Sales recovered in February.
Fed's Hawkish Stance
Federal Reserve Governor Christopher Waller recently emphasized the need for sustained progress in inflation before considering rate cuts. This hawkish stance has influenced expectations of future rate adjustments.
Japanese Intervention Warnings
Verbal warnings from Japanese authorities have deterred traders from betting on further Yen weakness. The threat of intervention looms over the USD/JPY pair.
USD/JPY Technical Analysis
The daily chart suggests that the USD/JPY has reached a peak around 151.20/151.90. A break above 152.00 could open the way to 153.00. A pullback is likely if the exchange rate falls below 151.00, with support levels at 150.44, 150.00, and 149.84.
Factors Impacting the Japanese Yen
Several key factors influence the value of the Japanese Yen:
- Bank of Japan policy: The Bank of Japan's ultra-loose monetary policy has contributed to the Yen's depreciation.
- Differential between Japanese and US bond yields: The widening spread between 10-year US and Japanese bonds supports the US Dollar against the Yen.
- Risk sentiment: The Yen is often seen as a safe-haven currency, strengthening during periods of market uncertainty.