Japanese Yen Update – Exports Surge, USD/JPY Approaches 150 Mark Again

Japanese Yen Update – Exports Surge, USD/JPY Approaches 150 Mark Again

Japanese exports hit a remarkable peak in January, showcasing a surge in overseas sales to an all-time high. The latest trade figures indicate a notable increase of 11.9% to 7.33 trillion Yen, while imports witnessed a decline of 9.6%. This data reveals a significant reduction in the country's deficit, now halved from JPY 3.51 trillion to JPY 1.76 trillion compared to a year ago.

USD/JPY, currently testing the 150 level, has experienced a substantial rise from January 2023 when it traded around 128. Over the past year, Japan's export sector has thrived due to the devaluation of the Yen. However, this trend is expected to shift in the upcoming months as interest rate dynamics change. The US Federal Reserve is anticipated to implement interest rate cuts, while Japan is forecasted to raise rates, leading to a potential decline in USD/JPY as the rate differential between the two currencies narrows.

Later today, the release of the FOMC minutes will provide insights into the future trajectory of US interest rates. Market sentiment has aligned with the Fed's stance, suggesting a tempered outlook for rate cuts. Meanwhile, Japanese authorities may consider intervening to prevent further weakening of the Yen, balancing the benefits of export competitiveness against concerns from other nations.

On the technical front, attention is drawn to the late October/early November double high around 152. If USD/JPY approaches this level, market vigilance for potential official intervention will be heightened. With potential caps on USD/JPY around this mark and narrowing rate differentials, a downward trajectory for USD/JPY could unfold in the coming year.

Initial support levels are identified around 149, followed by the 145-146 region. Retail trader data suggest a net-short sentiment, indicating a potential for USD/JPY prices to continue rising, contrary to the crowd sentiment.

USD/JPY DAILY PRICE CHART

For a detailed analysis of how daily/weekly changes impact USD/JPY price outlook, refer to the Latest IG Sentiment Report. principle every day.