rose to 159.40 on Friday, and the Japanese yen gave up all gains accumulated since the beginning of this week. Pressure intensified following comments from Bank of Japan Governor Kazuo Ueda that he did not provide clear guidance on rates ahead of the next meeting.
Ueda noted that the regulator must balance rising inflation with the risks of an economic slowdown. Before previous rate decisions, it had provided more explicit signals and the market expected a similar tone.
At the same time, investors acknowledge that the Bank of Japan could raise its inflation forecasts amid rising energy prices.
Earlier in the week, the yen had strengthened following statements by Finance Minister Satsuki Katayama regarding coordination with the United States.
Treasury on exchange rate policy and willingness to intervene in the market if necessary.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 159.00 level, which currently extends to 159.25. A bullish move towards 159.90 is likely (testing from below), followed by a possible fall back to the 159.00 level. Technically, this scenario is confirmed by the MACD indicator, whose signal line is below the zero level and points firmly upwards.
According to the H1 chart, the market is forming the structure of the next ascending wave towards the level of 159.60. A wave extension up to 159.90 is possible. Afterwards, a drop to at least 159.00 is likely. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line above the 80 level and pointing firmly upwards.
Conclusion
USD/JPY has returned to positive territory, and the yen has erased all of its weekly gains following BOJ Governor Ueda's ambiguous rate guidance. Markets had anticipated clearer signals ahead of the next meeting, but instead received a balanced assessment of competing inflation and growth risks.
While the Bank of Japan may still raise its inflation forecasts due to rising energy prices, the lack of explicit hawkish communication has weighed on the currency. The Finance Minister's previous intervention warnings provided only temporary support. Technically, a further rise towards 159.90 seems likely before any possible pullback, and the direction of the pair depends on whether Ueda delivers clearer signals at the April meeting.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
