Japanese Yen

Japanese Yen (6J) Futures: Consolidating as BoJ Remains Dovish

  • Risk sentiment is returning to the markets as fears of a recession in the US ease.
  • The Bank of Japan Governor says inflation is short-lived and that the bank will keep easing monetary policy to support the economy.
  • Bears are showing weakness in the charts.

The Japanese Yen (6J) futures remain neutral as the pair consolidates due to the eased fears of a recession in the US and the revival of risk sentiment. The dollar is trading weaker as its safe-haven status reduces due to a possible easing of rate hikes in the US.

On Monday, the Bank of Japan’s governor, Haruhiko, said that Japan’s CPI would probably stay around 2% this fiscal year but is expected to slow down from April 2023. He also said that cost-push inflation might not lead to the 2% inflation target for the BoJ sustainably.

He went on with his dovish sentiments, saying the bank’s monetary policy was not the factor behind the recent Yen weakening. He blamed it on the rise in oil prices. Therefore, the bank will continue with the current monetary easing to support the economy.

Today could be a quiet day for the Japanese Yen because of the Memorial Day holiday in the US. There is also nothing too crucial that investors expect from Japan. However, the EU leaders’ summit later in the day could impact the pair. A ban on Russian oil could mean cutting oil supplies, leading to higher prices. This ban would affect both the US economy and the Japanese economy. If the EU comes up with a complete ban, oil prices might soar.

According to Reuters, any further ban on Russian oil would add pressure to a strained oil market amid higher demand for gasoline, diesel, and jet fuel ahead of the peak travel season in the US.

Japanese Yen (6J) futures technical analysis: Bears showing weakness around the 30-SMA

Japanese Yen (6J) 4-hour chart
Japanese Yen (6J) futures 4-hour chart

The 4-hour chart shows the price consolidating just above the 30-SMA, acting as a support. The bias remains neutral until we see a clear break above the 30-SMA. The RSI value is above the 50.0 level, indicating a sign of bullishness.

It is prudent to watch the breakout of consolidation on either side to find a valid trading opportunity. The higher probability lies on the upside breakout.