Forex pair to watch: is the USD/JPY heading for a fall?

The JPY has been shoring up strength against the USD lately, thanks to some recent data and news.

This morning, the country’s GDP figures for December 2023 were released by the government of Japan’s Cabinet Office.

The data showed that Japan had avoided a technical recession in Q4 of 2023, when the Japanese economy grew by 0.4% in December 2023, rather than contracting as expected.

This emphasised the strengthening of the JPY we’ve been seeing lately again the dollar, with the pair falling from JPY147.07 to the dollar, to JPY146.68 after the GDP numbers came out.

Even before this, the USD has been trading lower against the JPY of late.

In fact, on Friday the USD/JPY fell to its lowest level in weeks at JPY147.06 to $1.

Compared with the 150.47 of Monday, it’s a significant drop which hadn’t been seen since February 1st.

Then, there have also been hints from the BoJ, bolstered by this morning’s GDP data, that they will abandon negative interest rates soon.

Both the rumours of interest rates rising at last, plus the stronger Japanese GDP and JPY, mean that we will likely see a lower USD/JPY pair for the first time in quite a while.

And although the USD’s recent bull run may not quite be over, it is the JPY which might temporarily be in the spotlight – sooner rather than later.

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