USD/JPY Daily Chart Analysis – 2024-03-01

The USD/JPY pair has shown resilience, reversing its previous day’s losses and climbing from a low of 149.20 to trade around the 150.49 level. This recovery can be attributed to a combination of factors, including dovish remarks from Bank of Japan (BOJ) Governor Ueda, which may signal a prolonged accommodative monetary policy stance, contrasting with Policy Board member Takata’s perspective. The Japanese labor market’s stagnation in January and a disappointing manufacturing PMI of 47.2, indicating the most significant contraction in over three years, further support the case for the BOJ to maintain its current policy.

From a technical standpoint, the chart indicates that USD/JPY is now trading firmly above the 150-handle, with support and bids noted below the 150.00 level and offers emerging above 150.40. The presence of option barriers at 151.00 and 152.00 could act as potential resistance levels, with their defense possibly capping upward movements.The steadiness in U.S. Treasury yields, with 2-year yields at 4.621% and 10-year yields at 4.247%, suggests a more stable but still cautious sentiment among investors. The Nikkei’s performance, reaching fresh record highs with a 1.8% increase to 39,869, reflects offshore buying and hedging activities, which may lend support to the USD/JPY pair.Market sentiment for the USD/JPY pair appears cautiously optimistic, with the pair’s recovery indicating a bullish bias among traders.

 The recent bounce in JPY crosses after the previous day’s sell-offs also contributes to this sentiment, with pairs like EUR/JPY, GBP/JPY, AUD/JPY, and NZD/JPY all showing signs of recovery, although the latter two are described as far from regaining their former strength.In summary, the fundamental analysis suggests that the dovish BOJ stance, weak domestic economic indicators, and supportive external factors like U.S. yields and the Nikkei’s performance are driving a cautiously optimistic sentiment in the USD/JPY market. Technically, the pair is holding above significant support levels with potential resistance ahead, indicating a bullish trend with caution warranted near key resistance zones.