- There were reports that Israel attacked Iran in retaliation.
- Ueda said the BoJ may have to raise rates if the yen continues to fall.
- US jobless claims remained flat from the previous week.
USD/JPI price analysis paints a bearish picture, influenced by the yen’s surge. The increase was due to growing demand for safe havens amid escalating tensions in the Middle East. At the same time, BoJ Governor Kazuo Ueda signaled a possible rate hike if the yen continued to fall.
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On Friday, the yen gained popularity among investors as one of the traditional safe-haven assets. This happened after reports that Israel attacked Iran in retaliation. Consequently, investors feared that the war would escalate, leading to a decline in risk appetite. However, the USD/JPI pair soon reversed most of its decline as it became unclear whether the attack had taken place.
Meanwhile, Bank of Japan Governor Kazuo Ueda said Thursday that the central bank may be forced to raise rates if the yen continues to fall. According to him, a further fall of the yen could lead to a jump in inflation.
A rate hike would give a breather to the yen, which recently fell to its lowest level since 1990. Therefore, investors will be watching the BoJ’s policy meeting next week to learn more about the prospects for a rate hike.
The data showed that US jobless claims remained flat from the previous week, missing forecasts for a slight increase. That points to the continued strength of the US labor market, which has remained resilient despite high rates. Therefore, markets continue to push back the timing of the Fed’s first rate cut.
USD/JPI Key Events Today
There are no economic events in the US or Japan today. Therefore, investors will keep an eye on the Middle East.
USD/JPI price technical analysis: 30-SMA puncture signals strong bearish momentum.
On the technical side, the USD/JPI price is bullish as it sits above the 30-SMA and is making more highs and lows. However, the bears recently made a strong candle that broke the 30-SMA support. This indicated an increase in bearish momentum. However, they failed to close below the SMA. Moreover, the price pulled back from the critical level of 154.00.
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Despite the failed attempt, the bears showed they may be ready to take over. Furthermore, the attempt came after the RSI made a bearish divergence, signaling a possible reversal. A break below 154.00 would allow the price to retest the key 152.00 level.
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