USD/JPY Tuesday dip-and-rally leaves the pair on the high end for Wednesday

• USD/JPY tipped into familiar highs near 148.70.
• Broad-market risk flows sent investors into the US Dollar.
• BoJ remains steadfast in its inaction on negative rates.

The USD/JPY hit a familiar hit bid at 148.70 as markets picked up the US Dollar (USD) through Tuesday, keeping the Japanese Yen (JPY) broadly lower on the day.

The Bank of Japan (BoJ) kept its policy rate locked in negative territory at -0.1% until the Japanese central bank sees more signs that inflation will avoid cooling off more than anticipated in the future. The BoJ is grappling with an opposite problem that is plaguing most global central banks; Japan’s long-standing struggle to stoke meaningful inflation within the domestic Japanese economy has the BoJ petrified that any upside moves in interest rates without already-rising wages and inflation pressures will cause structural deflation to set in.

Japan sees the next round of Tokyo Consumer Price Index (CPI) inflation figures on Thursday, where markets and the BoJ will both be keeping a close eye for any signs that price pressures will stop declining much below the BoJ’s desired 2% level. January’s Tokyo CPI for the year ended in January is forecast to tick down from 2.1% to 1.9%.

Friday also brings US Personal Consumption Expenditure (PCE) inflation figures, the Federal Reserve’s (Fed) favored methods of tracking US inflation. December’s Core US PCE Price Index is forecast to rise slightly from 0.1% to 0.2%, and the YoY Core figure is expected to ease to 3.0% from 3.2%.

USD/JPY Technical Outlook

USD/JPY continues to run ahead of the 200-hour Simple Moving Average (SMA) rising into the 147.00 handle, and the pair is up over 5% from 2024’s opening bids as Greenback bidding pressure keeps the pair close to medium-term high bids.

Daily candlesticks have the USD/JPY testing back into the high end after a failed bearish break of the 200-day SMA between 142.00 and 143.00, with the pair set for a bullish run into 2023’s late peak just shy of the 152.00 handle.

USD/JPY Hourly Chart

USD/JPY Daily Chart