Japanese Yen trades with modest loses against USD, lacks follow-through – Crypto News

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• The Japanese Yen loses traction after BoJ Deputy Governor Uchida’s remarks. 
• A positive risk tone further undermines the JPY and lends support to USD/JPY.
• The uncertain Fed rate cut path weighs on the USD and should cap the upside.

The Japanese Yen (JPY) ticks lower against its American counterpart for the second straight day on Thursday, though remains confined in a familiar range held since the beginning of this week. The Bank of Japan (BoJ) Deputy Governor Uchida Shinichi sounded less hawkish today and said that the central bank will not hike aggressively upon ending negative rates. This, along with the prevalent risk-on mood, undermines the safe-haven JPY, though subdued US Dollar (USD) price action acts as a headwind for the USD/JPY pair. 

A slew of influential Federal Reserve (Fed) officials recently indicated that the central bank is in no hurry to start lowering borrowing costs in the wake of the resilient US economy. That said, the prospects for an imminent shift in the Fed’s policy stance keep the USD bulls on the defensive below the highest level in almost three months. Furthermore, hopes that wage growth this year may outpace that of 2023 and pave the way for the BoJ to exit its decade-long ultra-loose policy contribute to capping gains for the USD/JPY pair. 

Daily Digest Market Movers: Japanese Yen ticks lower after less hawkish remarks by BoJ’s Uchida

• The Bank of Japan Deputy Governor Uchida Shinichi reiterated that the likelihood of sustainably achieving the price target is gradually increasing, which, in turn, weighs on the Japanese Yen. 
• Shinichi further added that Japan’s real interest rate is in deep negative territory and monetary conditions are very accommodative, and the same is not expected to change in a big way.
• Shinichi, however, noted that the BoJ won’t hike rates aggressively even after ending negative rate as the uncertainty over the outlook remains high, helping limit any further downside for the JPY. 
• The BoJ earlier this month signalled conviction on hitting the inflation goal and set the stage to pull interest rates out of negative territory at its upcoming meetings in March or April.
• BoJ Governor Kazuo Ueda had said that if the central bank gets evidence that a positive wage-inflation cycle will heighten, it would examine the feasibility of continuing with various steps under the massive stimulus programme.
• Japan’s biggest business lobby Keidanren and trade unions kicked off annual labour talks and big firms are expected to offer the highest wage increase in 31 years this year, paving the way for a shift in the BoJ’s policy stance.
• BoJ Executive Director Tokiko Shimizu said this Thursday that inflation has so far has been driven by cost-push factors and that even if negative rates are abandoned, accommodative conditions would remain in place.
• The US Dollar extends this week’s profit-taking slide from the highest level since November 14 and contributes to capping gains for the USD/JPY pair, though hawkish Federal Reserve expectations could act as a tailwind.
• The incoming US macro data suggested that the economy remains in good shape and gives the Fed more headroom to keep interest rates higher for longer, which, in turn, should continue to act as a tailwind for the buck.
• Several FOMC members, including Fed Chair Jerome Powell, don’t see an urgent case for lowering interest rates, suggesting that a rate cut isn’t likely until the May monetary policy meeting at the earliest.
• Fed Governor Adriana Kugler said on Wednesday that she is optimistic that inflation progress will continue, but stopped short of offering a timeline for when officials may be able to reduce borrowing costs.
• Boston Fed President Susan Collins said that she is looking for more evidence that inflation is on track toward the 2% target before moving to cut interest rates, though that step is more likely later this year.
• Minneapolis Fed chief Neel Kashkari noted that officials would like to see a few more months of inflation data before cutting interest rates and added that he thinks two to three cuts will be appropriate for 2024.
• Richmond Fed President Tom Barkin urged patience and said that it is a good idea for the central bank to take its time with interest-rate cuts given all of the uncertainty about where the US economy is headed.
• The yield on the benchmark 10-year US government bond holds comfortably above the 4.0% mark and supports prospects for the emergence of some USD dip-buying, warranting caution for the USD/JPY bears.

Technical Analysis: USD/JPY needs to break through 148.70-80 barrier for bulls to seize near-term control

From a technical perspective, bears need to wait for some follow-through selling below the 100-day Simple Moving Average (SMA), currently pegged near the 147.60-147.55 region, before positioning for deeper losses. The USD/JPY pair might then accelerate the fall to the 147.00 mark before dropping to the 146.35 intermediate support en route to sub-146.00 levels, or the monthly low touched last week.

Meanwhile, positive oscillators validate the positive outlook for the USD/JPY pair, though the formation of multiple-tops near the 148.75-148.80 region warrants caution for bullish traders. Hence, a sustained strength beyond the said barrier might trigger a fresh bout of a short-covering rally and lift spot prices to the 149.55-149.60 intermediate hurdle en route to the 150.00 psychological mark.