Following comments from Deputy Governor Nagamino the previous day, Governor Ueda also hinted yesterday during Tokyo trading hours that there may be a rate hike at next week’s Bank of Japan meeting. This caused the yen to strengthen against all currencies, pushing USD/JPY down to 156.72 in the European market.
Later, when the U.S. core Consumer Price Index (CPI) came in lower than expected, the dollar weakened further, and USD/JPY fell to 155.94. Although some buying followed, the price remained lower.
The likelihood of a rate hike at next week’s Bank of Japan meeting has increased, and concerns about rising U.S. inflation have eased. While it is still uncertain if the trend of a weaker dollar and stronger yen will continue, it is expected that the recent rise in USD/JPY since December could see further adjustments.
Expected USD/JPY Range: 157.20–155.30
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