Japanese Yen remains depressed against USD; awaits BoJ rate-hike cues

• The Japanese Yen struggles to capitalize on Friday’s recovery from a multi-month low. 
• BoJ Governor Ueda offered no cues about a December rate hike and weighed on the JPY.
• Intervention fears and subdued USD price action might cap gains for the USD/JPY pair. 

The Japanese Yen (JPY) struggles to capitalize on Friday’s positive move and attracts fresh sellers on Monday after Bank of Japan (BoJ) Governor Kazuo Ueda made no mention of a rate hike in December. This, along with a generally positive tone around the equity markets, undermines the safe-haven JPY and assists the USD/JPY pair to rally over 100 pips from the Asian session low, around the 153.85 region. 

That said, speculations that Japanese authorities might intervene in the FX market to prop up the domestic currency hold back JPY bears from placing aggressive bets. Apart from this, subdued US Dollar (USD) price action might contribute to capping the upside for the USD/JPY pair. Traders might also prefer to wait for BoJ Governor Ueda’s media conference at 04:45 GMT before positioning for a firm intraday direction. 

Japanese Yen is pressured by uncertainty over December BoJ rate hike 

• Bank of Japan Kazuo Ueda said this Monday that the central bank will continue to raise policy rates, adjust the degree of monetary support if the economy, and prices move in line with the forecasts.
• Ueda added that Japan’s economy is recovering moderately albeit there are some weak signs, and that the timing of the rate hike will depend on economic, price, and financial outlook.
• Japan’s Finance Minister Katsunobu Kato warned on Friday that the government will scrutinize the FX market with very high vigilance and take appropriate action against excessive moves.
• US President Joe Biden authorized Ukraine to use US-supplied long-range missiles to strike deeper inside Russia, raising the risk of a further escalation of geopolitical tensions.
• The US Dollar remains on the defensive following the post-US election rally to the year-to-date peak touched last Thursday, though any meaningful depreciation seems elusive. 
• Investors seem convinced that US President-elect Donald Trump’s touted policies will be inflationary, which could limit the scope for further rate cuts by the Federal Reserve.
• Adding to this, the recent comments from influential FOMC members, including Fed Chair Jerome Powell, forced investors to scale back their bets for more aggressive rate cuts. 
• Powell said last Thursday that with the economy growing steadily, a strong job market, and inflation still above the 2% target, there’s no need to hurry into cutting interest rates. 
• Adding to this, Boston Fed President Susan Collins noted on Friday that there’s no preset path for monetary policy and that the economy is in a very good place right now.
• Separately, Chicago Fed President Austan Goolsbee said that inflation numbers have to keep improving and that the recent CPI print has been a little higher than the target.
• The US Census Bureau reported on Friday that Retail Sales expanded by 0.4% in October, surpassing expectations for a 0.3% gain but down from September’s 0.8% increase.
• According to the CME Group’s FedWatch Tool, traders are currently pricing in a 60% chance of another 25-basis-point rate cut by the Fed at the December monetary policy meeting. 
• Investors now look to BoJ Governor Ueda’s press conference for cues about a possible December rate hike, which should infuse some volatility and drive demand for the JPY. 

USD/JPY bulls need to wait for sustained strength above the 155.00 mark

From a technical perspective, the USD/JPY pair once again showed some resilience below the 154.00 mark at the start of a new week. The subsequent move up, along with positive oscillators, favors bullish traders and supports prospects for a further intraday appreciating move. Acceptance above the 155.00 psychological mark will reaffirm the positive bias and pave the way for a move towards reclaiming the 156.00 round figure with some intermediate resistance near the 155.70 region. 

On the flip side, the 153.85 zone now seems to have emerged as an immediate support, below which the USD/JPY pair could drop to the 153.25 region en route to the 153.00 mark and the next relevant support near the 152.70-152.65 area. A convincing break below the latter might expose the very important 200-day Simple Moving Average (SMA) resistance breakpoint, now turned support, currently pegged near the 151.85 region.