The USD/JPY has been on an upward trend since January 16 and has gained up to 3.7% at times since the beginning of this month. In the process, the price successfully overcame the 130 yen resistance and returned to price levels seen at the beginning of January. However, the movement since mid-January was interrupted by a correction to 128.12 yen at the beginning of this month. Today, Wednesday, the currency pair so far still behaves relatively neutral and moved only -0.09% down. Thus, it remains to be seen whether yesterday’s downward movement of about -1.7% will continue today.
This movement can be traced back to statements made in the speech of Fed Chairman Powell on Tuesday. The latter has held out the prospect of future interest rate hikes in the fight against high inflation. In doing so, he does not rule out further measures to preserve the purchasing power of the U.S. dollar. Furthermore, however, he expects a “significant” decline in the inflation rate in the current year. However, it would probably take until 2024 for this to reach the Fed’s target of two percent again.
On the other hand, Powell pointed out that the labor market in the U.S. is in “extraordinarily strong shape.” The Federal Reserve Chairman most recently countered speculation in the financial markets last week following an interest rate decision, according to which the U.S. central bank could begin cutting interest rates before the end of the year. The background to this is fears of recession. There was speculation in the financial markets that the Fed might turn away from its fight against high inflation.