USD/JPY, EUR/JPY, and GBP/JPY Hover Below Decade's Highs

 | Jan 18, 2024 01:52AM ET

  • The Japanese yen is the worst-performing major currency pair today and so far this year!
  • The New Year’s Day earthquakes have thrown an H1 rate hike by the BOJ into doubt while other countries are seeing strong economic data and less dovish comments from central bankers.
  • GBP/JPY looks particularly strong, but both USD/JPY and EUR/JPY remain in clear bullish trends.

    • Despite general risk-off trading today, the Japanese yen hasn’t caught much of a bid; in fact, it’s actually the worst-performing major currency on the day and year, lagging even the beaten-down Australian dollar.

    While other currencies have been supported by stronger-than-expected economic data (UK CPI and US Retail Sales) or less dovish comments from key central bankers (ECB President Lagarde), the yen has seen little in the way of country-specific news or data of late.

    Instead, traders appear to be recognizing the opportunity cost of holding a currency with zero current yields, and expectations of BOJ interest rate increases in the first half of the year have taken a big hit after the New Year’s Day earthquakes. In the wake of the disaster, BOJ policymakers have pushed back on expectations for imminent rate hikes, arguing instead that the economy may need more stimulus as the country rebuilds.

    Looking ahead, there’s little in the way of Japan-specific economic data scheduled until the BOJ meeting on Tuesday, January 23, though the BOJ has essentially stated outright that it won’t make any changes until after the spring wage negotiations at the earliest. Therefore, Intermarket and technical analysis are likely to be the more important drivers for yen crosses in the coming days.

    h2 Japanese Yen Technical Analysis – USD/JPY Daily Chart