USD/JPY Experiences Volatility Amid Geopolitical Tensions

USD/JPY experienced a turbulent trading session on Friday, hovering in the 154.50s range after dipping to a daily low in the 153.00s, driven by a surge in demand for safe-haven assets, particularly the Japanese Yen (JPY).

The escalation of tensions in the Middle East spurred a flight to safety overnight, following reports of bomb explosions in Iran. These attacks were believed to be a response to Iran’s drone armada sent on April 13, allegedly orchestrated by Israel.

While the US Dollar initially benefited from the flight to safety, the JPY saw a more significant surge in demand, exerting downward pressure on USD/JPY, which represents the number of Japanese Yen per US Dollar. However, as tensions eased later in the session and reports indicated that Iran had no immediate plans for retaliation, the pair staged a partial recovery.

Inflation Data and Hawkish Rhetoric from BOJ Governor:

On the data front, the Japanese National Consumer Price Index (CPI) for March showed a slight decrease, with a year-over-year increase of 2.7%, down from 2.8% in February, according to the Japan Statistics Bureau. Despite this decline, Bank of Japan (BoJ) Governor Kazuo Ueda adopted a hawkish tone, suggesting that the central bank might consider raising interest rates if significant declines in the Yen led to currency-related inflation.

Technical Analysis:

In terms of technical analysis, USD/JPY appears to be forming a potential bearish Hanging Man candlestick pattern on Friday, assuming the closing price does not deviate significantly from the current market price. If this pattern is confirmed with a bearish candlestick on Monday, it could signal a short-term bearish reversal, indicating a likelihood of lower prices ahead.

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