JPY Strengthens, USD/JPY Hits ResistanceThe Japanese Yen (JPY) has strengthened following hawkish remarks from Bank of Japan (BoJ) Governor Kazuo Ueda, causing the USD/JPY pair to drop to 157.50 in the past hour. This comes after comments from BoJ Deputy Governor Ryozo Himino and rising inflation pressures in Japan, which open the possibility of interest rate hikes in January or March, thereby supporting the JPY's value.
However, some investors believe the BoJ may wait until the spring meetings to make a decision. Additionally, the widening yield gap between U.S. and Japanese bonds, driven by the Federal Reserve's hawkish stance, could deter investors from betting on JPY due to its lower yields. Furthermore, the risk-on sentiment may reduce JPY's appeal as a safe-haven asset and support the USD/JPY pair before U.S. inflation data is released.
From a technical perspective, the USD/JPY pair is currently facing strong resistance levels at 158.05 and 157.71, which could lead to a short-term price decline. If the price breaks the support level at 156.83, the pair could continue to fall to lower levels, such as 156.00 or 155.50, if the downward momentum persists.
The EMA 34 and EMA 89 lines suggest that short-term downward pressure may continue. If the price remains below the EMA 34 level (around 157.50), the USD/JPY pair could face stronger declines, especially if the EMA 89 level (around 157.00) becomes a strong resistance.
Traders need to closely monitor technical signals and support/resistance levels to make informed decisions.
