Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

USD/JPY: Bullish Momentum Has Stalled, But Uptrend Intact Until Fed Blinks

By Forex.com (Matthew Weller)ForexMay 17, 2022 01:17AM ET
www.investing.com/analysis/usdjpy-bullish-momentum-has-stalled-but-uptrend-intact-until-fed-blinks-200624337
USD/JPY: Bullish Momentum Has Stalled, But Uptrend Intact Until Fed Blinks
By Forex.com (Matthew Weller)   |  May 17, 2022 01:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

As my colleague Joe Perry noted last week, most central banks are expected to raise interest rates, in some cases dramatically, in the coming year in their fight against inflation.

The biggest outlier to this trend is the Bank of Japan, which is still actively easing monetary policy in an effort to stoke inflationary pressures amid a rapidly aging populace.

It is notable that Japan’s “core” CPI (excluding fresh food and energy prices) rose above 0% for the first time since 2020 last month, but regardless, traders are still pricing in just an outside chance of even a single 25bps rate hike from the BOJ in the next year, dramatically lower than the 200-300bps of rate increases expected from most other central banks.

On a day-to-day basis, changes in US treasury yields tend to drive the USD/JPY exchange rate. As the yield on the benchmark 10-year Treasury bond has lost its upside momentum and spent the last month consolidating around 3.00%, so too has the huge March-April rally in USD/JPY stalled:

USD/JPY Daily Chart
USD/JPY Daily Chart

Source: StoneX, TradingView

Looking ahead, expectations for FOMC policy will be a major driver for USD/JPY. Until Jerome Powell and company hint that interest rates increases will slow down or the Japanese economy starts to see meaningful inflation (both appear unlikely any time soon), USD/JPY should be well supported.

As we go to press, the key support level to watch is the 1-month low near 127.00; as long as rates hold above that area, the momentum remains with the bulls for a potential break to fresh 20-year highs above 131.25.

To the topside, the next major level of resistance comes in around 135.00, which marks the highest level the pair has traded at since 1998.

Original Post

USD/JPY: Bullish Momentum Has Stalled, But Uptrend Intact Until Fed Blinks
 

Related Articles

Kenny Fisher
Euro Slides As Inflation Jumps By Kenny Fisher - Jul 01, 2022

The EUR/USD is sharply lower on Friday and is currently trading just above the 1.04 line, down 0.76%. Eurozone inflation outperforms Eurozone CPI for June was higher than...

USD/JPY: Bullish Momentum Has Stalled, But Uptrend Intact Until Fed Blinks

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email