As the markets opened on Monday, there was a sense of calm after recent volatility. The Japanese Yen (JPY) has course-corrected after a recent surge, leading to a one-week low against the US Dollar (USD). Investors are now eagerly awaiting the Bank of Japan’s (BoJ) next move before making any decisions.
The BoJ’s recent hawkish pivot, raising interest rates to near 0.25%, has caused a significant unwinding of the Yen carry trade. This, coupled with interventions to defend the Yen, has resulted in a 12.5% increase in the Yen’s value against the Greenback from multi-decade lows.
Market focus will now shift to US inflation data and Japanese GDP figures later in the week. These releases could provide insights into how the BoJ plans to navigate growth and inflation within Japan.
USD/JPY Price Forecast
The Yen’s recovery has pushed USD/JPY below the 200-day Exponential Moving Average (EMA) at 151.84, with the pair reaching a low near 142.00 before bouncing back to test the 148.00 region.
While it’s too early to determine a trend reversal, there has been a 4.4% recovery rally in the past week. Bulls are expected to continue pushing the price action towards the 200-day EMA, supported by rising trendlines.