Japanese Yen Price, Chart, and Analysis
- The Bank of Japan (BoJ) will continue with ‘large-scale monetary easing’.
- USD/JPY 140 is under threat.
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How to Trade USD/JPY
The new Governor of the Bank of Japan, Kazuo Ueda, said recently that the central bank will continue with large-scale monetary easing – yield curve control – until the price stability target of 2% is met ‘in a sustainable and stable manner.’ Mr. Ueda said the central bank would take its time to ‘decide on adjustments to monetary easing’ as ‘the cost of impeding the nascent developments toward achieving the 2 percent price stability target, which is finally in sight, by making hasty policy changes would likely be extremely high.’ This continuation of the central bank’s highly accommodative monetary policy has seen the Japanese Yen weaken further against a range of G7 currencies. EUR/JPY is closing in on levels last seen in September 2008, while GBP/JPY recently hit levels last seen in February 2016.
Bank of Japan (BoJ) – Foreign Exchange Market Intervention
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One of the most active Yen pairs, USD/JPY, is pushing higher and yesterday hit a new multi-month high, aided in part by ongoing US dollar strength. After months of pricing-in US interest rate cuts later this year, markets are now starting to price in one more 25 basis point rate hike at the start of Q3 as the Fed continues to dampen down rate cut enthusiasm. US government bonds continue to weaken, pushing yields across the curve to multi-week highs, while ultra-short US government bills hit yield levels last seen decades ago.
The daily chart shows a positive picture with the pair back above all three simple moving averages, with longer-term strength confirmed by the break above the 200-dma last week. A confirmed break above a swing high at 137.91 occurred at the start of this week leading to a brief touch of 140 yesterday and today. Today’s US Core PCE release may give USD/JPY a fresh boost to take on the 140 level again ahead of the long weekend.
USD/JPY Daily Price Chart – May 26, 2023
| Change in | Longs | Shorts | OI |
| Daily | -7% | 2% | -1% |
| Weekly | 4% | 1% | 2% |
Retail trader data shows 29.23% of traders are net-long with the ratio of traders short to long at 2.42 to 1.The number of traders net-long is 0.29% higher than yesterday and 8.11% higher from last week, while the number of traders net-short is 2.82% higher than yesterday and 1.76% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USD/JPY trading bias
Chart via TradingView
What is your view on the Japanese Yen – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
