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USDJPY Hot Streak Continues. Is 156.00 Tennable? Attention Shifts to BoJ

The dollar’s rally against the Japanese yen continued on Thursday, with USDJPY registering a gain of 0.13 percent to trade at 155.52 at the time of writing. Furthermore, the pair hit an intraday high of 155.74, with the yen registering new 34-year lows.  Japanese policymakers made verbal interventions on Wednesday, but that, too, has failed to put a stop to the yen’s decline. Also, the lower-than-expected US GDP figures did not help matters.

The market has now turned its attention to the BoJ for directions on monetary policy, with the announcement set for Friday. In March, the BoJ raised interest rates for the first time in 17 years. However, the 10 basis points raise is still seen as ultra-accommodative, with the yen going down by 4.2% since that move.  The central bank is expected to raise interest rates by another 10 basis points.

The US economy grew by 1.6% in the first quarter of the year, lower than the forecast figure of 2.5%. This has increased the likelihood of interest rate reduction in June, as the Fed could be inclined to take measures to prevent adverse effect of higher-for-longer interest rates on the economy.

However, despite the weak US GDP data, the dollar got support from lower-than-expected initial jobless claims filings for the week ending April 18. The figure came in at 207,00, lower than the forecast 214,000. Looking ahead, traders will be focused on the Tokyo Core CPI data and BoJ interest rate decision for new cues on the USDJPY pair. Also, US Personal Consumption Expenditure (PCE) Price index could inject fresh volatility.

Technical analysis

USDJPY pivots at 155.47 and the upward momentum will continue if the buyers keep the price above that level.  With the buyers in control, the buyers could will head to the resistance at 155.79, beyond which they could potentially test 156.00. Alternatively, a move below 155.47 will hand over control to the sellers, with support established at 155.25. Furthermore, they could break the support in extension, and possibly test 155.03.