Fundamental Market Analysis for April 16, 2024 USDJPY

The Japanese yen (JPY) fails to gain meaningful momentum during Tuesday's Asian session and languishes near the 34-year low reached against the U.S. currency the day before. Monday saw a report that the Bank of Japan (BoJ) will focus less on inflation and shift to a more discretionary approach in setting monetary policy.

Meanwhile, BoJ Governor Kazuo Ueda said that after the abolition of negative rates in March, the central bank will revert to conventional monetary policy, which allows different data to determine the future path of rate hikes. This adds to the uncertainty in the BoJ's outlook for future rate hikes and continues to undermine the yen. In contrast, markets pushed back expectations for the first interest rate cut by the Federal Reserve (Fed) following the release of better than expected US consumer inflation data for March. This suggests that the large rate differential between the two countries will persist for some time to come, which, along with the bullishness of the US Dollar (USD), serves as a tailwind for the Dollar-Yen pair.

Trading recommendation: Trade predominantly with Buy orders from the current price level.