Dovish BOJ Nominations Push USD/JPY Higher as Yen Extends WeeklyUSD/JPYTASTYFX:USDJPYtastyfxIt’s been a tough week for the Japanese Yen, with the currency losing strength against the dollar for a second week in a row. On Friday afternoon, USD/JPY was on track to rise 0.63% on the week following a 1.53% gain from the week prior. Earlier this week, Japan’s Prime Minister, Sanae Takaichi, nominated Ayano Sato and Toichiro Asada to the Bank of Japan’s policy board. These two nominees are both dovish in their policy outlooks. Sato and Asada will replace outgoing board members Asahi Noguchi and Junko Nakagawa. Noguchi’s term ends in late March and Nakagawa’s ends in June. Noguchi was a policy dove—previously voting against rate hikes—so a dovish replacement didn’t surprise the market too much there. However, Nakagawa was more of a hawk, so the swap here will tilt the board into a more dovish setting. Ayano Sato has advocated for a weak yen in the past, claiming it is good for the economy. The Prime Minister’s picks are reminiscent of Abenomics-era board packing. Still, their ascension to the board isn’t guaranteed just yet. Takaichi’s coalition holds a majority in the lower house, but it will require some political chess moves to pass the nominations in the upper house where Takaichi’s party is in the minority. For now, however, the nominations seem to be weighing on the yen. Meanwhile, the macro argument for more hikes remains strong, given above-target inflation and wages that remain relatively elevated. It’s the political moves that are casting uncertainty over future rate hikes. For now, traders are waiting for the March Bank of Japan meeting for additional clarity. USD/JPY continued to gain ground this week, pushing above its 9-, 21-, and 35-day exponential moving averages (EMAs). Some resistance was found at the 61.8% Fibonacci retracement level from the January high/low range. The challenge for USD/JPY bulls now is breaking above trendline resistance that is anchored off the January swing high levels. A break higher could allow the technical momentum to continue and set up a test of the February swing high level that coincides with the 76.4% Fib level. If prices weaken from here, the previously mentioned EMAs or the 38.2% Fib level could offer a level of support. The upcoming labor cash earnings and household spending data for January, due out on March 7, will provide traders the next data point to inform the macro backdrop.