USD/JPY Extends Winning Streak on Powell's Hawkish Turn

USD/JPY Extends Winning Streak on Powell's Hawkish Turn

The USD/JPY pair extends its winning streak for the fifth consecutive day, reaching around 151.70 in the early European session on Friday. Federal Reserve (Fed) Chair Jerome Powell's unexpected hawkish remarks triggered a surge in US Treasury yields, strengthening the US Dollar (USD) against the Japanese Yen (JPY). However, the possibility of Japanese intervention to halt the USD/JPY advance is now under consideration in response to these developments.

Powell's Thursday statement at the International Monetary Fund (IMF) event expressed concerns that existing policies might not be sufficient to control inflation. This led to a surge in the US Dollar Index (DXY), hovering around 106.00, while the 10-year US bond yield stood at 4.62% at the press time.

Despite major central banks adopting aggressive tightening policies, the Bank of Japan (BoJ) maintains a dovish stance. BoJ Governor Kazuo Ueda emphasized caution in exiting ultra-loose monetary policy to prevent substantial bond market volatility.

Nevertheless, the Japanese Yen faces ongoing pressure, potentially delaying plans to exit the ultra-loose policy due to lower wage growth. Robust wage growth is deemed essential for the Japanese central bank's consideration of an exit from the prolonged easy monetary policy. Our outlook suggests a potential long continuation beyond the 152.000 area.


Our preference

Long positions above 151.35 with targets at 152.10 & 152.50 in extension.