USD/JPY in Focus: Economic Data and Potential Interventions Ahead Trust Company Trust Company
6 min readApr 23, 2024


In the last 30 days, several economic, policy, and geopolitical factors have impacted the USD/JPY price. Below, we will take a deeper look at these factors and what to expect in the coming month for the pair.

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Recent changes in the USD/JPY

USD/JPY has primarily risen in the past month, making historical highs that have caused a lot of anxiety about a possible intervention.

USD/JPY for the last 30 days. Source: TradingView

What caused the recent rise in USD/JPY?

The recent rise in the USD/JPY pair came from a rally in the dollar due to a stream of better-than-expected economic data. The month was filled with surprises in different sectors of the US economy. The first big shocker was the monthly report on US employment. Notably, March was a good month for job seekers in the US as the economy added a bigger-than-expected number of workers. At the same time, the unemployment rate fell. Soon after came a hotter-than-expected inflation report that had investors and policymakers rethinking the Fed’s rate cut outlook. Finally, the retail sales report revealed robust consumer spending, further confusing investors about the rate-cut outlook.

All these positive reports led to a significant decline in Fed rate cut expectations. Before the jobs report, markets were betting on three rate cuts in 2024, with the first starting in June. However, by the time the retail sales report came out, expectations had dropped to two cuts this year, with the first one in September. This led to a massive surge in the dollar and panic in Japan as the yen weakened.

As a result, Japanese officials came out with warnings about necessary action to support the yen. Without these warnings, the yen would have weakened much more than it did. Previous interventions in the market came after investors failed to heed verbal warnings. Moreover, they came at a time when dollar strength caused sharp swings. Any more sharp moves higher for the USD/JPY pair could trigger an intervention. The BoJ is now worried that the weaker yen will lead to a price hike for imported goods, which will drive inflation. Therefore, they have enough reason to intervene in the FX market.

Impact of geopolitical tensions

The war in the Middle East has also had some impact on the USD/JPY price. Initially, the tensions pushed investors to buy the dollar, which is considered a haven asset. However, for a brief moment, when investors believed the war had escalated to include Iran, they bought the yen, a more traditional safe-haven currency.

Meanwhile, the war has also led to an increase in oil prices, which has raised jitters about a spike in inflation, especially in major consumer countries like the US. High inflation could prolong high interest rates and keep the dollar rally going, which, in turn, would weigh on the yen.

Market participants are currently highly bearish on the yen. Notably, the interest rate gap between Japan and the US remains wide. Moreover, there is a high chance now that the Fed will hold on to high-interest rates for longer. Furthermore, recent data on speculative positions revealed an increase in bearish bets on the yen. This is a sign that traders expect further weakness in the currency.

Latest policy and economic changes

The US and Japan have experienced several policy and economic changes, as shown below.

The U.S.

Economic data from the US has been robust, shaping the outlook for Fed rate cuts. Notably, employment rose more than expected in March while the unemployment rate fell. Soon after, the Consumer Price Index rose a more than expected 0.4% in March. Another major report was the retail sales, which was also more substantial than expected at 0.7% in March. These reports have caused a significant delay in the expected Fed rate cut because policymakers are now worried that inflation has stalled.

Fed policymakers, including John Williams, see no need to cut rates now as the economy remains strong. Meanwhile, Powell failed to give guidance on the timing for the first cut, noting that the Fed might prolong the period of high-interest rates.


In Japan, data revealed a decline in the BoJ’s annual core CPI figure to 2.3%. Meanwhile, Tokyo’s core CPI fell to 2.4%. Weak inflation discourages the Bank of Japan from hiking interest rates aggressively. Therefore, this put the yen under pressure.

What to expect in the coming month

In the coming month, investors will keep an eye on the yen for signs of an intervention. Given the recent verbal warnings, there is a high chance that the Bank of Japan will try to support its weak currency. This would result in a sharp decline in the USD/JPY price. Moreover, investors will watch the Bank of Japan policy meeting for clues on when the next hike might come. Meanwhile, in the US, they will pay attention to incoming data on employment and inflation.

Finally, investors will watch out for developments in the Middle East war. An escalation could result in a decline in USD/JPY if traders view the yen as a safer asset than the dollar.

USD/JPY technical outlook

USD/JPY technical analysis

On the technical side, the USD/JPY price is on a bullish trend, trading well above its 22-SMA. The price recently broke above the 152.00 critical resistance level. This move pushed bullish momentum to an extreme level as the RSI broke above 70 into the overbought region. Therefore, any more upward movement might be little, as bulls are in the exhaustion region. Moreover, the price is approaching a solid resistance zone comprising the 1.27 Fib extension level and the 156.00 key level. Here, bears might be waiting to reverse the move.

Notably, the price is trading in two significant bullish trends. There is one steep one that respects the 22-SMA as support. Meanwhile, a shallower one respects a bullish trendline as support. Therefore, if bears take over at the resistance zone, the price might break the steep trend to retest the support trendline of the shallow trend.

Furthermore, the price will likely make new highs if it respects this trendline as support.

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