USD/JPY Remains Under Pressure after Powell & Ueda Remarks
USD/JPY Analysis
The bank of Japan stepped up its tightening efforts at the end of July, raising rates for the second time this year, pointing to more moves ahead and reducing its bond purchases. The ensuing steep fall of JPN225 and the surge of the Yen, forced the bank's deputy governor to dovish remarks and a pledge to not increase rates "when financial and capital markets are unstable". [1]
Governor Ueda however appeared more hawkish in Friday's testimony in Parliament and stuck to the tightening script, saying that official will keep adjusting policy if economic and price developments are moving as projected, according to Reuters [2]. Although the latest CPI data offered some mixed clues, core inflation ticked up to 2.7% y/y and stayed well above target, while preliminary Q2 GDP jumped to +3.1%, supporting the case for further tightening.
US Fed Chair Powell struck a dovish tone in his Jackson Hole speech, saying that "the time has come for policy to adjust", in the strongest hint to a September cut. With disinflation on track and labor market less tight, officials "do not seek or welcome further cooling". [3]
The divergence between Mr Powell who pointed to rate cuts ahead and his Japanese counterpart who kept more tightening in play, keeps USD/JPY under pressure. Having rejected the pivotal 38.2% Fibonacci after its short-lived bounce, it is now vulnerable to 140.26 and new 2024 lows.
On the other hand, Mr Powell did not comment on the extent of incoming cuts and aggressive market pricing leaves room for disappointment. Another recovery effort would not be surprising catalyst would a return above the 38.2% Fibonacci and the EMA200 does not look easy.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 25 Aug 2024 https://www.boj.or.jp/en/about/press/koen_2024/data/ko240807a1.pdf | |
| Retrieved 25 Aug 2024 https://www.reuters.com/markets/asia/boj-will-remain-vigilant-unstable-market-moves-says-governor-ueda-2024-08-23/ | |
| Retrieved 17 May 2026 https://www.youtube.com/watch |
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