5:17 PM · 13 January 2023

USDJPY lowest since May 2022

USDJPY extended its recent downward move and reached levels not seen since the end of May 2022, as easing inflation expectations from UoM data put additional pressure on the greenback. Japanese yen is the best performing G10 currency today and is supported by growing expectations that BoJ will move away from ultra-easy policy, after it unexpectedly doubled the ceiling of the tolerance band on 10-year JGBs in December. Markets also speculate that policymakers could further expand the aforementioned yield cap and revise upward inflation forecasts at the upcoming BoJ meeting which will take place on Wednesday. 

From technical point of view, the USDJPY pair  fell over 1.30% on Friday and is currently testing major support at 127.45, which is marked with 50.0% Fibonacci retracement of the upward wave launched in January 2021. Should break lower occur, downward move may deepen towards the lower limit of the long-term descending channel or even 121.75 mark, where 61.8% retracement is located. On the other hand, if buyers manage to halt declines at 127.45, an upward correction could be launched towards local resistance at 130.60.

USDJPY, H4 interval. Source: xStation5

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