**USD/JPY Analysis: Pair Stabilizes After Recent Swings Ahead of Key Economic Data**
*By Mitrade News Team (Original article, adapted and expanded)*
The USD/JPY currency pair has displayed significant fluctuations in recent trading sessions, in line with shifting investor sentiment, evolving monetary policy expectations, and anticipation ahead of crucial economic releases from both the United States and Japan. As the market steadies, participants are closely monitoring cues that will dictate the next leg of price action.
**Recent Performance of USD/JPY**
Over the past week, the USD/JPY pair has seen heightened volatility. The currency initially surged after robust U.S. economic indicators and dovish commentary from the Bank of Japan (BOJ). Subsequently, the pair encountered resistance and retraced some gains amid profit-taking and as investors reassessed the macroeconomic landscape.
*On the technical front:*
– USD/JPY tested resistance near 161.80, a multi-decade high.
– The pair subsequently consolidated and found support around the 159.00 area.
– The moving averages generally point upwards, underscoring the prevailing bullish trend despite intermittent corrections.
**Fundamental Drivers Impacting the Pair**
The intersection of monetary policy, economic data, and risk sentiment continues to shape USD/JPY movements. The following key factors are at play:
*Federal Reserve Policy Expectations*
– Markets are keenly watching the Federal Reserve’s inflation trajectory and economic guidance.
– Recent comments from Fed officials suggested a cautious approach toward rate cuts, reinforcing the dollar’s relative strength.
– Upcoming U.S. nonfarm payrolls data and CPI readings remain central to predicting the Fed’s next moves.
*Bank of Japan’s Direction*
– The BOJ maintained a dovish policy stance during its latest meeting, retaining ultra-loose monetary policy despite growing inflationary pressures in Japan.
– Authorities indicated that any normalization of policy would be prudent and gradual, citing uncertainty about domestic wage growth and inflation sustainability.
– Japanese officials, including high-ranking MOF and BOJ representatives, have occasionally verbalized concerns over rapid yen depreciation, but have yet to resort to direct intervention.
*Macroeconomic Data Releases*
– Recent U.S. data, including GDP growth and durable goods orders, have lent support to the U.S. dollar.
– Conversely, Japanese inflation rates have edged higher but remain below the BOJ’s sustainable target, reinforcing policy divergence.
– Economic announcements scheduled for the coming week, particularly U.S. jobless claims and Japanese industrial production, may sway intraday direction.
*Geopolitical and Global Risk Appetite*
– The prevailing risk sentiment, influenced by global events such as economic slowdowns or geopolitical tensions, often impacts demand for safe-haven currencies like the yen.
– Despite periods of risk aversion, the carry trade dynamic (borrowing in yen to invest in higher-yielding assets) has limited the yen’s upside, supporting USD/JPY at elevated levels.
**Technical Analysis and Chart Outlook**
From a chartist perspective,
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