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USDJPY Sustains Gains, Propelled By Dovish BOJ and Strong USD Fundamentals

USDJPY was on the rise in mid-morning New York trading session, on the back of positive US jobless claims data. The pair was trading at near a daily high of 149.480 at 11.50 EST, having risen by +0.82%.  The yen has spent most of the day above yesterday’s prices, and a dovish statement by the Bank of Japan Deputy Governor Shinichi Uchida has added to the downward pressure from the latest US jobs data.

BOJ Deputy Governor Uchida reiterated on Wednesday that the bank will almost certainly maintain its negative interest rate policy (NIRP). In any case, he added that a reversal of the NIRP will not necessarily lead to rapid rate hikes.

Meanwhile, yields on the 10-year US Treasurys have been rising throughout the day and stood at 4.16% at 11.30 AM EST. This has also put more pressure on a JPY that is already trading at 9-week lows. It also did not help that Japan’s January Economy Watchers Current Index fell below projections, coming in at 50.2 against a forecasted 50.3. Furthermore, the figure was below December’s 51.8, denoting a steady decline in the confidence of Japan’s workers.

The latest rally by the dollar has been powered by positive US labour market data released by the Department of Labour on Thursday. The US economy reduced its jobless claims by 3,000 in the week ending February 2024. The figure came in at 228k, against the projected 221k, solidifying last week’s positive US economic data.

Technical analysis

The RSI on the 30-minute USDJPY pair is at 65, signaling a strong bullish control. The momentum will favour the establishment of a pivot at 148.739. At this point, USDJPY will target 149.239. A breach of this level could create momentum for a further push to 149.616. However, a break below the first support at 148.296 will invalidate the bullish view and could set the stage for further downward movement to 174.834.