The USD/JPY price analysis reveals a vulnerable setup, retreating to the 149.50 region on Tuesday as the greenback stays weak while the yen soars on potential rate hike speculations. Sellers are gathering energy to break the 149.0 level.

The US10Y dipped to 4.375%, which could further boost the yen and weigh on the USD/JPY pair. On the other hand, Japanese yields have also eased on BoJ Governor Ueda’s comments that the bank will intervene if yields spike. While JGB yields are off the highs, markets anticipate BoJ’s further tightening.

On the data front, Japan’s Services PPI figures went to 3.1% y/y in January. Hence, rising wages could strengthen the odds of another BoJ hike. Tokyo inflation also soared to a 21-month top, reinforcing the monetary tightening. According to Bloomberg estimates, there is an 83% probability of two rate hikes in 2025.

The US dollar stays volatile as the Fed’s expectations shift. Mixed US PMI and consumer sentiment data have raised concerns about slowed growth. Traders anxiously await further guidance from the Core PCE Index and Q4 GDP data.

Broader risk sentiment is now playing a role in driving USD/JPY prices. Nvidia’s earnings reports and end-of-month flows could also stimulate the market.

Key Economic Events Today

• Japan Corporate Services Price Index
• ECB’s Schnabel Speaks
• US Consumer Confidence, Richmond Manufacturing Index
• FOMC Member Barkin Speaks

USD/JPY Technical Price Analysis: Corrective bounce

(Click on image to enlarge)

USD/JPY 4-hour chart

The USD/JPY has formed a temporary bottom at 148.88 with a corrective bounce above 150.0 that couldn’t be sustained. The current price level of around 149.50 is vulnerable, and the odds of breaking the bottom are high. The 4-hour chart shows that the price has stayed below the 30-period SMA since 14th Feb. Meanwhile, RSI is well above the oversold region, which indicates that the potential for a deeper downside persists.

On the flip side, a corrective upside could bounce to 38.2 Fib level at 151.12 ahead of 50.0 Fib at 151.82. However, the pair has to find acceptance above the 30-period SMA first. 

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