In the foreign exchange market for the week that ended on February 23rd, the yen strengthened against the dollar as the market increased expectations that the Bank of Japan (BOJ) would raise interest rates, helped by stronger-than-expected Japan's GDP.

Meanwhile, the U.S. started to discuss a ceasefire in the Russia-Ukraine conflict with Russia. However, the difference in perceptions between the U.S. and European countries on this issue spread uncertainty in Europe. As a result, traders took a risk-off stance and sold the dollar, weakening it against the euro.

February 17 (Mon)

The USDJPY started the weekly trading session in the lower 152 yen range. Later, the yen strengthened against the dollar as Japan's GDP exceeded market expectations. After a brief rebound, the pair fell to the lower 151 yen range.

The EURUSD hovered in the upper 1.04 range, while the GBPUSD touched 1.263.

February 18 (Tue)

The USDJPY rose to 152 yen after comments from Federal Reserve Board of Governors member Christopher Waller lowered expectations for a U.S. interest rate cut. Thereafter, the pair lacked direction and fluctuated within the upper 151 yen range.

The euro weakened against the dollar, and the EURUSD fell to the 1.044 range. The GBPUSD hovered around the 1.26 level.

February 19 (Wed)

Hajime Takata, a BOJ Policy Board member, insisted that he was somewhat in favor of a rate hike. However, as his comments were confirmed in line with market expectations, the yen weakened against the dollar.

After that, the increased dollar selling momentum pushed the USDJPY down to the middle of the 151 yen range. In addition, the minutes of the FOMC meeting revealed that the FRB will hold off on lowering interest rates for the time being. However, the market's reaction was limited.

Meanwhile, uncertainty is spreading in Europe as the U.S. and Russia began talks on a ceasefire for the Russia-Ukraine conflict and the U.S. and E.U. began trade talks. The EURUSD fell to the 1.04 range, and the GBPUSD also fell to the upper 1.25 range.

February 20 (Thu)

As the market increased expectations that the BOJ would raise interest rates, traders were more inclined to buy the yen. In addition, differences in perceptions regarding the development of the ceasefire between the U.S. and Europe also contributed to the dollar's weakness. The USDJPY broke below the 150 yen level and fell to 149.3 yen.

As the dollar weakened, the EURUSD rose to the 1.05 range and the GBPUSD climbed to the upper 1.26 range.

February 21 (Fri)

BOJ Governor Kazuo Ueda stated before the Lower House Budget Committee that the central bank would stand ready to ramp up its purchase of government bonds if long-term interest rates rose sharply. This statement increased the momentum of yen selling, and the USDJPY climbed to 150.7 yen in the afternoon of Tokyo time.

However, the pair fell back to the 148 yen range after the disappointing U.S. economic data. Growing expectations that the BOJ will raise interest rates soon, as well as traders' risk-off stance, also helped strengthen the yen.

The EURUSD fell to the upper 1.045 range, and the GBPUSD also fell to the lower 1.26 range.

February 24 (Mon)

• 10:00 Europe: January Harmonised Index of Consumer Prices (revised HICP)
• 10:00 Europe: January Harmonised Index of Consumer Prices (revised HICP core index)

February 26 (Wed)

• 15:00 U.S.: January new home sales

February 27 (Thu)

• 12:30 Europe: European Central Bank (ECB) Governing Council meeting minutes
• 13:30 U.S.: October-December quarterly real gross domestic product (revised GDP)

February 28 (Fri)

• 13:30 U.S.: January personal consumption expenditures (PCE deflator)
• 13:30 U.S.: January personal consumption expenditures (PCE core deflator, excluding food and energy)

The following currency pair charts are analyzed using an overlay of the ±1σ and ±2σ standard deviation Bollinger Bands, with a 20-period moving average.