USD/JPY: Well-set for weekly loss near 131.50, Kuroda’s retirement speech, US NFP in focus

• USD/JPY clings to mild losses amid inactive markets, mixed concerns at home.
• BoJ held record JGB’s in March to tame hawkish concerns as Kuroda bids adieu.
• Japan’s real wages remain downbeat despite recent improvements, household spending also drop.
• Fears of BoJ’s exit from ultra-easy monetary policy, downbeat US data and yields keep bears hopeful ahead of key catalysts.

USD/JPY struggles for clear directions as Good Friday’s off outside Japan joins mixed factors at home, as well as cautious mood ahead of the key US data, to challenge momentum traders. That said, the Yen pair seesaws around 131.60-70 while printing mild losses on its way to reverse the previous weekly gain, which was the first in five.

Earlier in the day, Japan’s inflation-adjusted prices of household spending for February, also known as real wages, improved from a one-year low. On the same line were figures for Overall Household Spending and Labor Cash Earnings as both these catalysts improved for the said month. However, the actual figures still suggest a contraction in spending, which in turn pushes the Bank of Japan (BoJ) to propel markets.

Together with the recently firmer data, the hopes of the BoJ’s exit from the easy-money policy also required the Japanese central bank to buy more bonds. As a result, the BoJ held record Japanese Government Bonds (BoJ) in March.

It’s worth noting that the early 2023 edit of the Yield Curve Control and the stark dove Haruhiko Kuroda’s retirement from the BoJ’s Governorship also advocate the central bank’s hawkish move in the future and allow the JPY to remain firmer. Even so, Japan’s Finance Minister (FinMin) Shunichi Suzuki and Japanese Chief Cabinet Secretary Hirokazu Matsuno both signaled the continuation of the current monetary policy earlier in Asia.

On the other hand, downbeat US data triggered recession woes and exert downside pressure on the US Dollar, as well as on the Treasury bond yields. Even so, the market’s risk-off mood and consolidation ahead of the key US jobs report for March put a floor under the US Dollar, which in turn prods USD/JPY bears.

Apart from the US employment figures, a retirement speech from BoJ Governor Kuroda will also be eyed closed for fresh impulse.

While the downbeat market forecasts for the US Nonfarm Payrolls (NFP) suggest more weakness of the USD/JPY pair, the recently easing hawkish Fed bias and hopes of witnessing softer jobs report gives room for a surprise factor and a strong reaction to the same. On the other hand, increasing odds of the BoJ hawkish move also favor the Yen pair sellers.

Technical analysis

USD/JPY remains indecisive until it stays between the 50-DMA level of around 133.15 and an upward-sloping support line from mid-January, close to 131.30 by the press time.