The Japanese Yen struggled after Japan’s Weighted Median Inflation Index showed a slowdown, with the Bank of Japan indicating a 1.1% increase in April, down from the previous month. However, Japan’s Corporate Service Price Index posted a year-over-year reading of 2.8% in April, marking its fastest increase since March 2015. The decline in US Treasury yields also put pressure on the US Dollar, causing it to lose ground as traders awaited data on the Federal Reserve’s preferred measure of inflation.
On the economic front, Japan’s Finance Minister emphasized the importance of stable currency movements that reflect fundamentals and expressed vigilance over foreign exchange movements. The Japanese Yen gained strength from Bank of Japan officials’ comments, including Governor Kazuo Ueda and Deputy Governor Shinichi Uchida, highlighting progress in moving away from zero inflation and the need to re-anchor inflation expectations at the 2% target. However, Japan’s National Consumer Price Index dropped to 2.5% YoY in April, raising pressure on the central bank to consider policy tightening.
Technical analysis of the USD/JPY pair shows potential for a bearish reversal as it approaches the apex of a rising wedge pattern. The pair currently trades around 156.70, with immediate support at the nine-day Exponential Moving Average at 156.48 and potential resistance at 157.45. A breach of support levels could lead to downward pressure on the pair, possibly towards the throwback support at 151.86.
The Japanese Yen price today shows a decline against the Swiss Franc and other major currencies, with USD, EUR, and CHF showing slight gains. The heat map displays the percentage changes of major currencies against each other, indicating the base and quote currency pairs’ movements. The Japanese Yen is known as one of the most traded currencies, influenced by various factors such as the performance of the Japanese economy, the Bank of Japan’s policy, and risk sentiment among traders.
Investors view the Japanese Yen as a safe-haven investment, particularly during times of market stress when it is considered a reliable and stable currency. The Bank of Japan’s ultra-loose monetary policy, aimed at stimulating the economy, has led to a depreciation of the Yen against other major currencies. The policy divergence between the Bank of Japan and other central banks, such as the US Federal Reserve, has widened the interest rate differentials, favoring the US Dollar against the Japanese Yen.
