According to FXStreet, on January 17, the Japanese Yen (JPY) depreciated after reaching its highest level in nearly a month against the US dollar. However, this decline is not too strong as the market still expects the Bank of Japan (BoJ) to continue raising interest rates next week. Recent statements from BoJ Governor Kazuo Ueda and Deputy Governor Ryozo Himino have further strengthened confidence in the possibility of a rate hike.
In addition, the Yen is also supported by the fear of risks and concerns about US President-elect Donald Trump's tax policies, helping the Yen maintain its role as a safe-haven asset.
This week, some important data from Japan was released. Production prices in Japan have increased continuously for 46 months, reaching 3.8% over the same period last year. However, real wages and spending by Japanese households have fallen for the fourth consecutive month, suggesting inflationary pressures are still rising. This raises the likelihood that the BoJ will raise interest rates by another 0.25% at its meeting on January 23-24. Currently, the market is assessing this probability as about 79%.
Meanwhile, in the US, inflation is showing signs of slowing down, as reflected in the recently released Producer Price Index (PPI) and Consumer Price Index (CPI). This leads to speculation that the US Federal Reserve (Fed) may consider cutting interest rates by the end of 2025.
From a technical perspective, if the USD/JPY pair breaks the important support level of 155.00, it could continue to fall to the 154.60-154.55 range. This is a strong support level, and if it is broken, prices are likely to fall further to 154.00 or the 153.35-153.30 range.
Conversely, if USD/JPY increases in price, the main resistance levels will be at 156.00, followed by the 156.30-156.35 and 156.65-156.70 regions. If it breaks through these thresholds, the pair could head towards 157.00, and in a more optimistic scenario, could reach a multi-month high of 158.85.
Although the Japanese Yen is under pressure from the USD, expectations of a rate hike from the BoJ and a decrease in US inflation will continue to support this currency in the coming time. Economic factors and interest rate policies from both Japan and the US will be the deciding factor for the next trend of the USD/JPY pair.
According to Lao Dong, updated at 11:00 on January 17, the USD/JPY exchange rate is currently fluctuating around 155.387 USD/JPY, meaning 1 USD can be exchanged for about 155 JPY.
