Forex News
- Australian Dollar gains ground amid cautious sentiment surrounding the Reserve Bank of Australia policy outlook.
- RBA’s Hunter expects tight labor markets and inflation to remain above target.
- Traders await the US January CPI, with headline and core inflation seen easing to 2.5%.
The Australian Dollar (AUD) advances against the US Dollar (USD) on Friday after posting losses of more than 0.5% in the previous session. Still, AUD/USD may find support from cautious sentiment surrounding the Reserve Bank of Australia (RBA) policy outlook.
RBA Assistant Governor Sarah Hunter said she expects the labor market to remain tight and inflation to stay above target for some time, adding that she is closely monitoring capacity constraints across the economy and labor market.
RBA Governor Michele Bullock reiterated that the Board stands ready to raise rates further if inflation proves persistent, emphasizing that any inflation “with a three in front of it” would be unacceptable. She stressed that policy decisions will remain data-dependent, with forecasts continually reassessed.
Australia’s Consumer Inflation Expectations rose to 5.0% in February from 4.6%, ending seven consecutive months below 5%. The broad-based increase supports the RBA Board’s decision to lift the cash rate target to 3.85%.
Traders now turn to the January Consumer Price Index (CPI) report from the United States (US). Headline inflation is expected to ease to 2.5% from 2.7%, while core inflation is seen moderating to 2.5% from 2.6%. A softer reading could open the door for the Federal Reserve to resume rate cuts after pausing at its first meeting of the year.
Markets are pricing in two Federal Reserve rate cuts this year, with the first likely in the second half following stronger-than-expected January jobs data. However, uncertainty lingers over potential changes to the Federal Reserve’s balance sheet ahead of Kevin Warsh’s expected Chairmanship in May. Warsh has previously opposed asset purchases but recently indicated openness to coordinating with the Treasury to help ease yields.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.03% | 0.35% | 0.01% | -0.04% | -0.08% | 0.02% | |
| EUR | -0.03% | -0.00% | 0.33% | -0.02% | -0.07% | -0.11% | -0.02% | |
| GBP | -0.03% | 0.00% | 0.33% | -0.02% | -0.07% | -0.11% | -0.01% | |
| JPY | -0.35% | -0.33% | -0.33% | -0.33% | -0.40% | -0.44% | -0.34% | |
| CAD | -0.01% | 0.02% | 0.02% | 0.33% | -0.07% | -0.11% | 0.00% | |
| AUD | 0.04% | 0.07% | 0.07% | 0.40% | 0.07% | -0.04% | 0.06% | |
| NZD | 0.08% | 0.11% | 0.11% | 0.44% | 0.11% | 0.04% | 0.10% | |
| CHF | -0.02% | 0.02% | 0.01% | 0.34% | -0.01% | -0.06% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- USD/JPY attracts some buyers and snaps a four-day losing streak to an over two-week low.
- The divergent BoJ-Fed policy expectations keep a lid on any meaningful gains for the pair.
- Traders keenly await the release of the US CPI report before placing fresh directional bets.
The USD/JPY pair gains some positive traction during the Asian session on Friday and moves away from an over two-week low, around the 152.30-152.25 region, touched the previous day. Spot prices, however, lack bullish conviction and currently trade and remain below the 153.00 mark amid mixed cues.
Investors remain hopeful that Japan's Prime Minister Sanae Takaichi could be more fiscally responsible and that her policies will boost the economy. This might prompt the Bank of Japan (BoJ) to stick to its policy normalization path, which, along with the risk-off impulse, acts as a tailwind for the safe-haven Japanese Yen (JPY). The US Dollar (USD), on the other hand, continues with its struggle to attract buyers and keep a lid on the USD/JPY pair’s uptick.
Market players trimmed their bets for another interest rate cut by the US Federal Reserve (Fed) in March following the release of the blowout US Nonfarm Payrolls (NFP) report on Wednesday. The current market pricing, however, indicates a greater chance of at least two 25 bps Fed rate cuts in 2026. Adding to this, threats to the US central bank's independence keep the USD within striking distance of the weekly low and contribute to capping the USD/JPY pair.
Traders also seem reluctant and opt to wait for more cues about the Fed's rate-cut path before positioning for the next leg of a directional move. Hence, the focus will remain glued to the release of the latest US consumer inflation figures, due later during the North American session. Nevertheless, the USD/JPY pair seems poised to register heavy weekly losses, and the divergent BoJ-Fed expectations back the case for a further near-term depreciating move.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.50% | -0.23% | -3.04% | -0.45% | -1.12% | -0.34% | -1.07% | |
| EUR | 0.50% | 0.27% | -2.59% | 0.05% | -0.62% | 0.16% | -0.57% | |
| GBP | 0.23% | -0.27% | -2.54% | -0.23% | -0.89% | -0.11% | -0.84% | |
| JPY | 3.04% | 2.59% | 2.54% | 2.70% | 2.01% | 2.83% | 1.95% | |
| CAD | 0.45% | -0.05% | 0.23% | -2.70% | -0.57% | 0.12% | -0.62% | |
| AUD | 1.12% | 0.62% | 0.89% | -2.01% | 0.57% | 0.79% | 0.05% | |
| NZD | 0.34% | -0.16% | 0.11% | -2.83% | -0.12% | -0.79% | -0.73% | |
| CHF | 1.07% | 0.57% | 0.84% | -1.95% | 0.62% | -0.05% | 0.73% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- EUR/USD flat lines around 1.1870 in Friday’s early Asian session.
- The US Dollar is range-bound after mixed US economic data.
- Traders will closely monitor the flash Eurozone GDP and US CPI inflation reports on Friday for fresh impetus.
The EUR/USD pair trades on a flat note near 1.1870 during the early Asian session on Friday. The major pair steadies amid mixed signals from the latest release of US economic indicators. Traders await the preliminary reading of the Eurozone Gross Domestic Product (GDP) for the fourth quarter (Q4) and US inflation data, which are published later on Friday.
Earlier this week, data showed that US Retail Sales were unexpectedly unchanged in December, indicating underlying weakness. The reading followed an unrevised 0.6% increase in November, worse than the expectation of 0.4%. However, the US Nonfarm Payrolls (NFP) data came in stronger than estimated in January. Traders continue to assess mixed US economic data and will take more cues from the US Consumer Price Index (CPI) inflation report on Friday for some hints about the interest rate path.
"Earlier in the week, we got retail sales numbers that made things look pretty bad and then we got payroll numbers, which were pretty much affirming the no-fire, no-hire environment that we have and one where the Fed is going to wait on hold until it gets a better sense on tariffs, inflation, and whether or not the retail sales numbers are actually signaling an impending recession," said Marvin Loh, senior global market strategist at State Street in Boston.
The European Central Bank (ECB) decided to hold its benchmark interest rate steady at 2.0% for the fifth meeting in a row last week, as widely expected. Traders raise their bets that policy will be steady all year before possible rate hikes next year, which could provide some support to the shared currency.
The Eurozone GDP is projected to grow 0.3% and 1.3% on a quarterly and annual basis, respectively, in Q4. Nonetheless, any signs of weakening in the Eurozone economy could drag the EUR lower against the Greenback in the near term.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Gold price tumbles to $4,910 in Friday’s early Asian session.
- Better-than-expected US labor data reinforced the view that the Fed may keep rates elevated for longer.
- The US Consumer Price Index (CPI) inflation report for January will take center stage on Friday.
Gold price (XAU/USD) faces some selling pressure around $4,910 during the early Asian session on Friday. The yellow metal tumbles over 3.50% on the day, with algorithmic traders appearing to amplify the precious metal’s sudden drop. Traders will closely monitor the release of the US Consumer Price Index (CPI) inflation report for January, which will be released later on Friday.
Concerns about Artificial Intelligence (AI) spurred a sell-off across financial markets, with margin calls also likely adding to the downtick. “Margin calls also likely added to the selloff, with some investors forced to exit positions in commodities, including metals to provide liquidity,” said Nicky Shiels, head of metals strategy at MKS PAMP SA.
Furthermore, stronger-than-expected US January employment data firmed expectations that there won’t be a Federal Reserve (Fed) rate cut soon. This, in turn, reduces the appeal of holding non-yielding Gold.
Nonfarm Payrolls (NFP) rose by 130,000 jobs in January, following a downwardly revised 48,000 increase in December, according to the US Bureau of Labor Statistics (BLS) on Wednesday. The Unemployment Rate edged down to 4.3% in January from 4.4% in December.
Traders brace for the US CPI inflation data on Friday for more cues on the Fed’s monetary policy path. The headline and core CPI are projected to show an increase of 2.5% YoY in January. Any signs of softer inflation could revive some rate cut bets and boost the precious metal in the near term.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
MUFG’s Senior Currency Analyst Lloyd Chan expects USD/MYR to keep trending lower, targeting 3.7000 by end‑2026 as a more durable Ringgit appreciation cycle develops. The view is underpinned by Malaysia’s ICT‑driven investment upcycle, macroeconomic stability, and neutral BNM policy with steady foreign bond inflows. External support from firmer commodities, electronics demand and CNY resilience is highlighted, alongside clear downside risk scenarios.
Ringgit outlook supported by fundamentals
"We expect USDMYR to continue trending lower toward 3.7000 by end‑2026, supported by a more durable ringgit appreciation cycle driven by structural fundamentals."
"Malaysia’s economy remains in an ICT‑led investment upcycle, with total investment approvals across the manufacturing and services sectors rising 14.7%yoy in 9M25. Notably, ICT has emerged as the largest contributor to approved investments, underpinned by strong foreign participation, with ICT investment approvals growing by around 32%yoy over the same period."
"Macroeconomic stability also compresses risk premiums. Inflation remains well‑contained despite RON95 fuel subsidy rationalisation and adjustments to sales and services tax, allowing BNM to maintain policy stability. Fiscal discipline keeps sovereign risks in check, supporting investor confidence in local financial markets."
"We expect BNM to maintain a neutral policy stance, keeping the policy rate at 2.75% through 2026, while further Fed easing should continue to narrow rate differentials. This will enhance Malaysia’s relative yield appeal and has already helped drive a steady pickup in net foreign bond inflows since 2024."
"Downside risks to our ringgit outlook include a sharp global growth slowdown, a significant decline in commodity prices, or a downturn in the global electronics cycle."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- GBP/JPY slides as risk aversion boosts Yen demand; equities fall on AI disruption fears.
- Break below 50-day SMA turns bias neutral; RSI signals emerging bearish momentum.
- Drop under 207.00 may expose deeper support at 206.80 and 205.20.
The Pound Sterling tumbles on Thursday, down 0.36% in the day as risk aversion boosted the safe-haven appeal of the Japanese Yen. Renewed AI disruption fears sent Wall Street plunging, while haven assets like Gold, Silver and the US Dollar failed to gain traction. At the time of writing, the GBP/JPY trades at 209.09 after hitting a daily high fo 209.55.
GBP/JPY Price Forecast: Technical outlook
The overall trend is up, yet after the cross breached the 50-day SMA at 210.87, it shifted to neutral-bullish with the first support level emerging at a support trendline around the 207.00-207.20 area.
Momentum shifted bearish as depicted by the Relative Strength Index (RSI). Hence further downside is seen in the short term.
If GBP/JPY tumbles below 207.00, the next support would be the 100-day SMA at 206.85 ahead of the December 16 swing low 0f 206.77. On further weakness, the next demand area would be the December 1 low at 205.20.
Conversely, if GBP/JPY rises past 208.50, the 209.00 mark emerges as the first resistance. Overhead lies the February 12 daily high at 209.55, ahead of the 210.00 milestone.
GBP/JPY Price Chart – Daily
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.46% | -0.26% | -3.05% | -0.42% | -1.14% | -0.33% | -1.00% | |
| EUR | 0.46% | 0.20% | -2.66% | 0.05% | -0.68% | 0.13% | -0.57% | |
| GBP | 0.26% | -0.20% | -2.54% | -0.15% | -0.87% | -0.07% | -0.73% | |
| JPY | 3.05% | 2.66% | 2.54% | 2.77% | 2.00% | 2.85% | 2.06% | |
| CAD | 0.42% | -0.05% | 0.15% | -2.77% | -0.62% | 0.10% | -0.58% | |
| AUD | 1.14% | 0.68% | 0.87% | -2.00% | 0.62% | 0.81% | 0.11% | |
| NZD | 0.33% | -0.13% | 0.07% | -2.85% | -0.10% | -0.81% | -0.67% | |
| CHF | 1.00% | 0.57% | 0.73% | -2.06% | 0.58% | -0.11% | 0.67% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- GBP/USD is trading within familiar territory, easing back into 1.3600.
- US CPI inflation looms ahead on Friday.
The Pound Sterling edged higher to 1.3640 on Thursday, recovering from an earlier pullback after stronger-than-expected US jobs data initially weighed on the pair. The Bank of England (BoE) held rates at 3.75% at its February 4 meeting in a narrow 5-4 vote split, with four members preferring a 25 basis point cut to 3.50%. Governor Andrew Bailey voted with the majority to hold but said he sees "scope for some further easing" and expects "a sharp drop in inflation over coming months," with the BoE projecting CPI to fall back to the 2% target by April. UK Q4 2025 Gross Domestic Product (GDP) data released on February 12 showed growth of just 0.1%, with monthly GDP for December also rising 0.1%, confirming the sluggish pace of the UK economy. Sterling found some support from easing domestic political uncertainty after Prime Minister Keir Starmer secured backing from senior cabinet members following the resignation of his chief of staff Morgan McSweeney amid the Lord Peter Mandelson scandal.
On the US side, January Non-Farm Payrolls (NFP) came in at 130K with unemployment at 4.3%, pushing the expected timing of the next Federal Reserve (Fed) rate cut from June to July. Friday's delayed US Consumer Price Index (CPI) release for January is the week's most important event, with consensus expecting headline CPI at 0.29% month-on-month and core CPI at 0.39% month-on-month. A softer reading would weaken the US Dollar and likely push Cable back toward its late-January high.
On the daily chart, GBP/USD is trading at 1.3640, consolidating below the late-January high of 1.3870, which marked its strongest level in over four years. The pair has pulled back from that peak but is holding above the 50-day Exponential Moving Average (EMA), suggesting the broader uptrend still holds. This week's range has been contained between 1.3520 and 1.3710, with price forming a higher-low structure off the February 6 dip to 1.3520. The Relative Strength Index (RSI) on the daily chart reads near 55, pointing to neutral momentum with room to move in either direction.
On the 4H timeframe, resistance stands at 1.3710 (this week's high), followed by the 1.3820 to 1.3870 zone, where the pair stalled in late January. A break above 1.3870 would mark a fresh multi-year high and target the 1.3900 to 1.3950 area. Support on the downside sits at 1.3550 (the 50-day EMA area), followed by 1.3520 (last week's low) and the psychological 1.3500 level. The Moving Average Convergence-Divergence (MACD) on the daily chart shows a bearish crossover forming below the signal line, suggesting short-term momentum is fading, though the broader trend structure remains constructive as long as 1.3500 holds. A decisive move from Friday's CPI data is likely to determine whether Cable resumes its advance toward 1.3870 or extends the corrective pullback toward the 1.3400 to 1.3500 demand zone.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- USD/JPY lost ground for a fourth straight trading session on Thursday, driven by continuing geopolitical factors.
- BoJ officials continue to verbally intervene on Yen markets to keep the ball rolling.
The Japanese Yen strengthened past 153 per US Dollar on Thursday, rising for the fourth straight session after Prime Minister Sanae Takaichi's decisive general election victory on February 8 gave her a clear mandate to pursue expansionary fiscal policy. Markets are betting that her agenda of increased government spending, tax cuts, and a two-year suspension of the 8% food sales tax will strengthen economic growth and provide the Bank of Japan (BoJ) with greater scope to normalize monetary policy through additional rate hikes. Verbal intervention from Japanese officials reinforced the Yen bid, with top currency diplomat Atsushi Mimura warning that the government remains on high alert over foreign exchange movements, while Finance Minister Satsuki Katayama reaffirmed Tokyo's commitment to act on currency moves consistent with the US-Japan joint statement.
On the US side, January Non-Farm Payrolls (NFP) surprised higher at 130K with unemployment falling to 4.3%, which initially supported the US Dollar but was quickly overshadowed by the Yen rally. The Federal Reserve (Fed) held rates at 3.50% to 3.75% at its January meeting and confirmed the end of quantitative tightening. Looking to Friday, the delayed US Consumer Price Index (CPI) release for January is the focal point, with consensus forecasting headline CPI at 0.29% month-on-month and core CPI at 0.39% month-on-month. A softer print would reinforce expectations for Fed rate cuts later in 2026 and could accelerate Yen gains.
On the daily chart, USD/JPY has fallen sharply from its February 7 high near 157.70 to test the 152.50 area, its lowest level since early January. Price action shows a steep bearish impulse driven by the post-election Yen surge, with the pair now trading below the 50-day Exponential Moving Average (EMA), confirming a bearish shift in the short-term trend. The 200-day EMA sits higher near 155.00, a level the pair broke below decisively this week, reinforcing the bearish bias. The Relative Strength Index (RSI) on the daily chart has dropped toward 35, approaching oversold territory but not yet signaling exhaustion.
On the 4H timeframe, the sell-off has been relentless since the February 8 election result, with price carving out a series of lower highs and lower lows. Immediate support stands at the 152.50 area, where the pair found a session low, followed by the 2026 low near 152.00 and the psychological 150.00 handle. A break below 152.00 would open the door toward the 38.2% Fibonacci retracement of the 139.87 to 159.44 range near 151.70. To the upside, resistance is now layered at 153.50 (broken support turned resistance), 155.00 (the 200-day EMA confluence), and the 156.00 to 157.00 zone. The Moving Average Convergence-Divergence (MACD) histogram on the 4H chart is showing expanding bearish momentum, suggesting further downside pressure ahead of Friday's CPI data.
USD/JPY daily chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
OCBC analysts Sim Moh Siong and Christopher Wong note that USD/KRW has traded lower on Dollar weakness, stronger JPY, pro-risk sentiment and sizeable foreign inflows into Korean equities, with the KOSPI outperforming regionally. They argue strong fundamentals, including AI-led electronics and semiconductor export demand, should keep supporting KRW.
AI cycle and inflows back KRW recovery
"USDKRW traded lower this week, amid the pullback in USD, stronger gains in JPY while pro-risk sentiment and foreign inflows to local equities this week (+US$1.018bn) further supported the appreciation."
"We had long argued that strong economic fundamentals including the AI-led electronics upcycle, strong semiconductor export demand (first 10 days exports jumped 44.4% YoY) and KOSPI outperformance should continue to add to KRW’s recovery momentum."
"Not forgetting that President Lee has earlier said that he expects the USDKRW to fall to around 1400 in about 1 – 2 months at a press conference (21 Jan)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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