Yen Faces Short-Term Pressure Following Ueda Inauguration

USD/JPY PRICES, CHARTS AND ANALYSIS:

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USD/JPY FUNDAMENTAL BACKDROP

The Yen looks set to face some immediate selling pressure following the inauguration of Kazuo Ueda as the new Bank of Japan Governor. Murmurs have continued to persist regarding a potential policy shift by the incoming Governor, however his remarks at his opening press conference have put such hopes on the back burner for the immediate future.

The BoJ’s new Governor reiterated his commitment to stick to easing monetary policy for now as inflation has not reached the BoJ target of 2% or shown any consistency. This doesn’t come as a particular surprise as Ueda had made similar comments during his confirmation hearings with any shift in policy likely to come later in the year. A lot of the optimism around a policy shift has stemmed from the fact that Ueda is the first private sector Governor since Makoto Usami in 1964 while he is also the first Economist to be appointed Governor.

Following the comments, the Yen faces dovish prospects in the short term coupled with a continued recovery in sentiment following the banking sector woes are likely to see USDJPY continue its advance. The medium to longer term prospects for the Yen however remains promising with a review of the monetary easing policy underway as well as potential revisions to the Yield curve control policy still on the cards but largely expected to occur in June at the earliest.

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Looking ahead on the economic docket we do have some Fed speakers today and the rest of the week brings US CPI and Fed minutes into focus tomorrow.

For all market-moving economic releases and events, see the DailyFX Calendar

TECHNICAL OUTLOOK

From a technical perspective, USD/JPY has printed a fresh higher high yesterday just shy of a key support area around the 134.00 handle. We are trading lower for the day as the US Dollar index has come under some selling pressure ahead of tomorrow’s US data release.

Given that a new high has been printed the chance for a pullback remains, however this will likely rest on today’s daily candle close as well as the data out of the US tomorrow. We are currently trading bang on the 50 and 100-day MA with a golden cross pattern setting up as well, hinting at a potential push to the upside. A break and close above the 134.00 level will bring key resistance around the 135.70 level and the 200-day MA at the 137.00 handle into focus.

Fundamentals and technicals both hinting at further appreciation for the pair in the short term. It remains important however to keep an eye on US data tomorrow which could put a spanner in the works should inflation come in lower than expected and the probabilities of a Fed hike in May take a knock.

USD/JPY Daily Chart – April 11, 2022