Fundamental Market Analysis for May 27, 2024 USDJPY

The Japanese Yen (JPY) ended its three-day losing streak, potentially influenced by comments from Bank of Japan (BoJ) Governor Kazuo Ueda on Monday. Mr. Ueda stated that progress has been made in moving away from zero and raising inflation expectations. However, he emphasized the need to anchor them again, this time at the 2% target. He also stated that the BOJ will proceed with caution, monitoring the actions of other central banks with inflation-targeting frameworks.

Japan's annual inflation rate remains above the 2% target set by the Bank of Japan. The persistent inflationary trend is placing pressure on the central bank to consider tightening policy. The BOJ emphasises that normalising policy necessitates a favourable economic cycle characterised by a sustained and stable achievement of the 2% price target, coupled with robust wage growth.

On Friday, the dollar lost ground as the 10-year US Treasury yield fell to 4.46 per cent. This may be attributed to an improved risk sentiment following the University of Michigan's release of a softer 5-year expected consumer inflation rate for May on Friday.

Trade recommendation: We follow the level of 156.700, if it bounces back, we take Sell positions. If we consolidate above, we take Buy positions.