USD/JPY approaching the top of the rising wedge
USD/JPY approaching the top of the rising wedge
The Japanese yen (JPY) snapped a three-day losing streak following comments from Bank of Japan (BoJ) Governor Kazuo Ueda.
Mr. Ueda noted that progress has been made in raising inflation expectations but stressed that they need to be anchored at 2%. In addition, the Bank of Japan (BoJ) chief highlighted that the central bank will act cautiously and cooperate with other central banks that have inflation-targeting regimes.
Japan's national consumer price index (CPI) fell to 2.5% year-on-year in April from 2.7% the previous month, but remains above the BoJ's target. At the same time, market expectations that the BoJ will raise interest rates further this year contributed to a rise in Japan's 10-year government bond yields last week, which rose above 1% for the first time since May 2013.
Japan's annual inflation rate remained above the BoJ's 2% target, putting pressure on the central bank, FX Street reported. Shinichi Uchida, the BoJ's Deputy Governor, said the central bank has returned to its traditional monetary policy framework to achieve its 2% price stability target.
The US dollar index (.DXY) fell to 104.70, and the yield on the 10-year US Treasury note fell 0.22% to 4.467%.
At the time of writing, the USD/JPY is trading at 156.82, down 0.11% over the past 24 hours.
The latest data from the University of Michigan for May showed that expectations for 5-year consumer inflation fell to 3.0% for the month, with the consumer sentiment index still pointing to a six-month low.
According to the CME FedWatch tool, markets are now pricing in a 44.9% probability of a 25 basis point rate cut by the Federal Reserve in September.
The USD/JPY may continue its bearish trend, as indicated by the formation of an ascending wedge, while the 14-day Relative Strength Index (RSI) remains bullish, suggesting further volatility.
