USD/JPY Holds Steady Around 151.40 Amid BoJ’s Cautious Monetary Policy Approach

USD/JPY maintains stability as the Bank of Japan (BoJ) adopts a cautious stance to ensure accommodative monetary conditions. Tokyo’s Consumer Price Index (CPI) for March increased by 2.6% year-over-year, slightly up from February’s 2.5% rise. The Core Tokyo CPI also saw a 2.9% year-over-year climb, somewhat lower than February’s 3.1% increase.

Japanese Finance Minister Shunichi Suzuki highlighted the importance of stable currency movements aligned with economic fundamentals. He expressed concerns over rapid fluctuations in foreign exchange (FX) markets, which he attributes to speculative activities. Suzuki reassured that authorities are closely monitoring FX developments and are ready to take necessary measures to address any disorderly movements.

Prime Minister Fumio Kishida echoed the sentiment, emphasizing the need for the central bank to maintain accommodative monetary conditions. He also stressed the government’s commitment to collaborating with the BoJ to promote wage increases and steer the economy away from deflationary pressures. This cautious approach from the BoJ likely contributed to the support of the USD/JPY pair.

Meanwhile, the US Dollar Index (DXY) strengthened, nearing 104.60, driven by recent data indicating economic expansion in the United States. The fourth quarter of 2023 witnessed a 3.4% annualized GDP expansion, surpassing market expectations. The US Gross Domestic Product Price Index also remained steady, with a 1.7% increase.

Furthermore, hawkish statements from Federal Reserve (Fed) officials, particularly from Fed Governor Christopher Waller, reinforced the strength of the Greenback. Considering the robust inflation figures, Waller’s remarks hinted at a potential delay in interest rate cuts.

USD/JPY