USD/JPY Bullish Bias Intact Ahead of US Inflation Update
USD/JPY Analysis
The pair extended this year's advance to the highest levels since late-1986 a few weeks ago, but subsequently retreated, in a move that has caused speculation that Japanese authorities may have intervened in the FX market to support the ailing yen. However, this pullback was rather shallow and USD/JPY rebounds, maintaining its bullish momentum and the ability to set new highs past 160.00.
The Bank of Japan raised rates out of negative territory and abandoned its yield curve control in March, in watershed shift towards a less loose setting. The action has not failed to stem the Yen's relentless devaluation against the greenback, as policymakers adopted a cautious approach and maintained their accommodative bias. Furthermore, their US counterparts have turned cautious towards lowering rates, as inflation slowdown has stalled this year.
On the other hand, it is reasonable to expect more rate hikes this year by the BoJ and the International Monetary Fund (IMF) endorsed such moves today, even if it cautioned towards gradual and data-dependent path [1]. On the other side the Pacific, Fed is still expected to lower rates this, despite the higher-for-linger mantra.
Even though at a slow pace, the favorable policy dynamics are shifting and this will eventually weigh on USD/JPY. As such, we can see another breach of the EMA200 that would threaten the bullish bias, but we are cautious around sustained weakness below it, as the downside contains multiple support levels. The next leg of the move will be determined by Wednesday's US CPI inflation update.
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 12 Apr 2026 https://www.imf.org/en/News/Articles/2024/05/13/pr24156-japan-imf-executive-board-concludes-2024-article-iv-consultation |
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