The USD-JPY pair in May was a lesson in volatility. Economic data and market sentiment pushed the currency pair all over the place. Here’s a closer look at its rollercoaster ride.
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Early Struggles and Mid-Month Resilience
The month began with a notable drop. On May 1, USD-JPY stood at 154.47, down 2.11% from the previous day due to strong U.S. economic data and a hawkish Fed. The pair continued its slide, hitting 153.63 by May 2, as Japan’s industrial output data was as disappointing as your favorite team’s playoff performance—0.1% month-on-month versus the expected 0.9%.
Mid-month brought some relief. By May 8, USD-JPY had clawed its way back to 155.48, a 0.46% increase. Tokyo’s inflation data, showing a 2.2% year-on-year rise in May (up from 1.8%), hinted at potential policy shifts from the Bank of Japan. By May 13, USD-JPY climbed to 156.20, boosted by April’s retail sales data, which came in hotter than expected at 2.4% year-on-year.
End-of-Month Turbulence
The latter part of May saw USD-JPY dealing with mixed economic signals. By May 29, the pair reached 157.60, up 0.28%. Traders were on edge, waiting for Japan’s forex intervention data, set to drop on May 31. Speculation about the intervention was running high, stirring the pot.
The joyride didn’t last long. On May 30, USD-JPY dropped to 156.81, down 0.50%, as a Credit Agricole report hinted at the implications of Japan’s forex interventions, injecting a dose of uncertainty. By May 31, USD-JPY managed a slight recovery, closing at 157.21, a 0.25% rise.
Intervention and Late-Month Drama
Then came the rebound. By May 29, the pair jumped to 1.3714, a 0.51% rise. Why? Speculation about Japan stepping in to save the yen, confirmed by Credit Agricole. Their intervention was all about battling rising inflation and weak economic data.
May 31 saw USD-JPY at 1.3680, a tiny 0.02% increase. Japan released forex intervention data and retail sales surprised on the upside (2.4% vs. 1.9% expected). But let’s not get carried away—Tokyo’s May inflation (2.2% YoY) showed the economy’s still struggling.
As we transition into the last month of Q2, be on the lookout for the Bank of Japan to make some sudden and unannounced moves in the yen.
Is USD-JPY a Buy?
According to TipRanks’ Summary of Technical Indicators, USD-JPY is a Buy.
