USD/JPY: Fundamental Analysis + Next Technical Targets

DAY_PROFITS Updated   
FX:USDJPY   U.S. Dollar / Japanese Yen
After reaching the Year-To-Date (YTD) high, USD/JPY bulls retreat to 139.50 in early European trading on Thursday. The Yen pair celebrates intraday gains but struggles in mixed markets.However, Bank of Japan (BoJ) Governor Kazuo Ueda told Reuters that the economy is showing signs of improvement but is still far from hitting the inflation target. “BoJ will patiently sustain the easy monetary policy,” he added.

However, US Treasury bond yields remain higher than mid-March and support USD/JPY prices. A downward revision in Germany's Q1 GDP revived recession fears in the European powerhouse, which supported the US Dollar and bond coupons at multi-day highs.

While BoJ's Ueda defends easy money policy, the FOMC Minutes show policymakers are divided about the US central bank's 0.25% rate hike. Even if Atlanta Fed President Raphael Bostic and Federal Reserve Governor Christopher Waller raise hawkish Fed concerns, the market doubts another such move in June.

Above all, the US policymakers' inability to deliver a debt ceiling extension deal and the House Representatives' long weekend contrast with the negotiators' view that they see progress in the latest rounds of talks. The US Treasury Department accepted Fitch and Moody's concerns about the US credit rating. The US Dollar and yields rise as the market rushes to safety.

US stock futures recover while US Treasury bond yields rise to their highest levels since mid-March.

Despite US default fears and Fed-BoJ policy divergence, USD/JPY buyers are still in play. Apart from these catalysts, the US weekly Jobless Claims, Chicago Fed National Activity Index, and Pending Home Sales should be watched for direction. Our technical analysis still favors the maintrend, and we expect a new impulse.
✅ Previous Winning Idea USD/JPY





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