USD/JPY advances on strong US Dollar, higher US yields

• USD/JPY rises propelled by strong US retail data strengthening the Dollar against the Yen.
• US housing indicators falter as Building Permits and Housing Starts underperform, hinting at a construction sector slowdown.
• US Industrial Production remains stable, underlining a mixed yet resilient economic backdrop.
• Japan's Finance Minister Suzuki stresses vigilant Forex market monitoring.

The US Dollar clocks gains versus the Japanese Yen in early trading during the North American session. Strong economic data from the United States (US) and neutral to hawkish comments by US Federal Reserve officials boost the Greenback. The USD/JPY trades at 154.61, 0.22% above its opening price.

USD/JPY moves past 154.00 amidst strong retail sales data and hawkish Fed commentary

US housing data was weaker, revealing that builders may be taking a breather with the high level of inventory. Building Permits in March decreased by 4.3%, with figures dipping to 1.458 million, less than the 1.514 million estimates and February’s 1.523 million. Consequently, Housing Starts plunged -14.7%, from 1.549 million to 1.321 million, below forecasts of 1.48 million.

Other data revealed by the US Federal Reserve (Fed) showed that Industrial Production in March remained unchanged at 0.4% MoM.

Despite that, Monday’s strong Retail Sales data sparked a reaction in the fixed-income market, with US Treasury yields having been rising more than 10 basis points during the week. Traders had trimmed their bets that the Fed might cut rates twice instead of three times, as the Chicago Board of Trade (CBOT) data depicted. The Fed is expected to drive the main reference rate to 4.965% towards the end of 2024.

On Monday, San Francisco Fed President Mary Daly said the US central bank is in no rush to ease policy. Meanwhile, USD/JPY traders await speeches by Fed’s Governor Jefferson, New York Fed John Williams, and Chair Jerome Powell.

According to Finance Minister Suzuki, Japanese authorities have remained vocal about “closely monitoring the latest developments” in the Forex market. Market participants had pushed the exchange rate past the 154.00 threshold, and no reaction by the Bank of Japan (BoJ) or the MoF might keep the rally alive.

USD/JPY Price Analysis: Technical outlook

 The major remains upward biased, and with no clear signs of intervention, USD/JPY buyers might drive the exchange rate to challenge 155.00. Once cleared, the next stop would be 155.78, followed by the latest cycle high at 160.32. On the flip side, if the pair drops below 154.00, that could open the door for a pullback to April’s 12 high turned support at 153.38 before dropping to 153.00.