16 September 2024, USD/JPY
USDJPY:
The USD/JPY pair is trading at a subdued level around mid-140.00 during the Asian session on Monday, with low trading volumes due to the Japanese holiday and the pair appearing vulnerable near the YTD low reached last week. However, those with a bearish outlook may prefer to await key central bank events this week before adjusting their positions in anticipation of a further decline.
The Federal Reserve (Fed) will announce its decision following its two-day meeting on Wednesday, to be followed by the Bank of Japan's (BoJ) policy update on Friday. Meanwhile, differing expectations between the Fed and BoJ have resulted in the recent unwinding of Japanese Yen (JPY) trades and continue to exert downward pressure on the USD/JPY pair.
Following last week's US CPI and PPI report, which indicated a potential easing of inflationary pressures, markets have begun to assess the likelihood of a significant 50 basis points (bps) rate cut by the US central bank. In contrast, recent hawkish remarks from BOJ officials have confirmed market expectations that the Japanese central bank will announce another interest rate hike before the end of this year.
This indicates that the most probable scenario for the USD/JPY pair is a continued downward trajectory, which supports the likelihood of the current downtrend continuing for a further two months. However, the overall positive risk-off sentiment may prevent a significant increase in the safe-haven yen and discourage new bullish bets in the absence of any significant macroeconomic data.
Trade recommendation: We follow the level of 140.00, when fixing below we consider Sell position, when rebounding we consider Buy position.
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