At yesterday’s Bank of Japan meeting, Japan lowered its growth and inflation outlook because of the U.S. high tariff policies. As a result, the yen became weaker. Bank of Japan Governor Ueda also said, “We will not raise interest rates quickly when basic inflation is still low.” Because of this, USD/JPY rose to the high 144 yen range. Some people had expected that Japan might raise rates due to pressure from the U.S.
Later, during the New York session, the U.S. dollar became stronger again, and USD/JPY rose to 145.73 yen. The U.S. ISM Manufacturing Index for April was better than expected. Also, NEC Chairman Hassett said, “Talks with China are going well.” Because of this, the market became more optimistic about trade negotiations, and stock prices went up.
This created a “risk-on” mood, meaning investors were more willing to take risks. As a result, the yen weakened and the dollar strengthened, making USD/JPY rise nearly 3 yen in one day.
Because it’s Japan’s Golden Week and a holiday (May Day) in Europe, the market was quiet, but the strong movement may continue. However, since the rise happened very fast, there may be a correction soon to fill the gap.
Expected USD/JPY Range: 146.80 (61.8%) to 144.20
Note: This information does not guarantee profits. Please make your own decisions when trading.