Forex Trading

Price analysis: USD/JPY hits 155.00 ahead of Bank of Japan decision

Increased volatility pushed USD/JPY to 155.00

Amidst heightened market volatility, the US dollar soared to new 34-year highs against the yen, crossing the 155.00 mark intraday. This surge reflects significant bullish sentiment surrounding the US dollar, influenced by broader economic factors and investor confidence in its strength.

Positive US data and higher yields driving US dollar

USD/JPY demonstrating a -0.49 correlation with 10-year Treasury yields over the past year, has been propelled upwards by optimistic US data and rising yields. The 10-year shook off falling yields at the beginning of the week to rise back near year-to-date highs around 4.7%. This illustrates the tight linkage between higher Treasury yields, attractive returns on US investments, and the consequent strengthening of the USD against the JPY.

EUR/JPY also near all-time highs

Alongside the US dollar, the euro has also neared all-time high levels against the yen, underscoring the yen’s broader struggle against major currencies. Currently above 166.00, the pair is already at highs dating back to 2008 and not far from all-time highs around 170.00. This trend is a clear indicator of the yen’s weakened position in the forex market, affected by global economic dynamics and shifts in investor sentiment towards stronger currencies.

Will the Bank of Japan intervene?

Faced with a rapidly declining yen, speculation mounts over potential intervention from the Bank of Japan, reminiscent of its 2022 strategy where it sold foreign currencies in exchange for yen. Such actions would aim to stabilize the JPY , closely watched by forex traders for potential market impacts. The Bank of Japan meets at 11pm EST on Thursday, April 25th.

US GDP, inflation could tip the scales

Upcoming US GDP data for Q1 2024 and Personal Consumption Expenditures (PCE) inflation figures hold the power to either propel USD/JPY to new highs or cause a retreat. These economic indicators will be key in dictating the pair’s direction, with traders vigilantly monitoring for signals of US economic health.

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