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Published: 29 May 2026,07:17
Daily Market Analysis New
*The Japanese Yen continued to weaken against the US Dollar as wide interest rate differentials and cautious BOJ policy supported ongoing capital outflows and carry trades.
*Japan’s core CPI slowed to 1.4% YoY in April, below expectations and under the BOJ’s 2% target, reinforcing expectations for a gradual and cautious policy path.
*Strong US yields and delayed BOJ normalization could push the pair toward the key 160 level, though intervention risks and safe-haven demand may limit excessive depreciation.
The Japanese Yen (JPY) has continued to exhibit notable weakness in recent sessions, trading near the 159 level against the US Dollar. This persistent depreciation reflects structural interest rate differentials and cautious monetary policy, keeping the currency under pressure despite occasional intervention efforts by Japanese authorities.
Japan’s latest inflation data showed a further slowdown. The core Consumer Price Index (CPI), which excludes fresh food, rose only 1.4% year-on-year in April 2026, down from 1.8% in March and below market expectations of 1.7%. The core-core measure (excluding food and energy) stood at 1.9%. This cooling trend, partly aided by government fuel subsidies, has kept inflation below the Bank of Japan’s (BOJ) 2% target for several months.
The softer inflation reading reduces immediate pressure on the BOJ to hike rates aggressively. With the current policy rate at 0.75%, the wide interest rate gap with the US continues to weigh on the yen, encouraging carry trades and capital outflows. While authorities have intervened verbally and in the market to curb excessive weakness, the fundamental drivers remain intact.
In the near term, the JPY is likely to remain vulnerable to further depreciation or range-bound trading around current levels. Renewed strength in US yields or delayed BOJ tightening could push USD/JPY toward the psychologically important 160 level. However, any escalation in global risk aversion may trigger temporary safe-haven buying of the yen.
Analysts expect modest recovery potential later in 2026 if the BOJ signals further normalization, but near-term upside for the yen appears limited. A sustained break below key support levels could invite more forceful intervention. Market participants should monitor upcoming BOJ communications, US data releases, and geopolitical developments for directional signals.
NZD/JPY has successfully broken above its critical resistance level at 94.30, before extending its rally toward a fresh 2026 high near the 94.90 mark. The breakout above this key resistance zone signals a strong bullish development and reinforces the prevailing upward momentum for the pair.
The latest price action suggests that buyers remain firmly in control, with the breakout potentially opening the path for further upside extension if momentum continues to strengthen. The move to new yearly highs also reflects improving market sentiment and confirms the continuation of the broader bullish structure.
Momentum indicators further validate the constructive outlook. The Relative Strength Index (RSI) has moved into overbought territory, highlighting strong buying momentum and sustained upward pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) continues to rise and diverge positively, indicating that bullish momentum remains robust and has yet to show meaningful signs of exhaustion.
Overall, the technical landscape remains strongly supportive of a bullish bias for NZD/JPY, with the recent breakout and strengthening momentum indicators suggesting the potential for additional gains in the near term as long as the pair remains above the former resistance zone.
Resistance Levels: 95.10, 96.25
Support Levels:94.28, 93.26
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