High inflation rates Put USD/JPY Under Selling Pressure
The Japanese Yen gained strength from the speculations of hawkish stance from the Bank of Japan(BoJ). The Bank of America Global Research economists’ have anticipated a 3% inflation rate for Japan in 2023, higher than the market consensus of 1.9%. As such, it is predicted that the bearish trend for the USD/JPY pair will continue unless the BOJ implements effective economic policies to address inflation, which rose to 41 year high level of 4% in December.
The overall outlook remains bearish, favouring short positions. The economists at BofA even stated that they would recommend selling the pair during rallies. On Monday, the pair reached 130.89 but corrected to 130.15 on Tuesday, likely due to a resurgence in investors’ risk appetite. The 21-EMA is still providing support for the US dollar.