25 September 2024, USD/JPY
USDJPY:
The USD/JPY pair is trading near 143.30 despite the weakening of the US Dollar (USD) during the early Asian session on Wednesday. However, rising expectations of a sharp rate cut by the US Federal Reserve (Fed) in November may continue to weigh on the pair.
On Tuesday, Fed Chair Michelle Bowman said that key inflation indicators remain ‘uncomfortably above’ the 2% target, which requires the Fed to be cautious in cutting interest rates. However, she would prefer the Fed cut the rate by a quarter of a percentage point, which would be more in line with the central bank's traditional moves.
Later on Wednesday, Fed chief Adriana Kugler is scheduled to speak. Friday will centre on the release of the Personal Consumption Expenditure (PCE) price index for August. Any dovish comments from Fed officials and signs of weakening inflation could undermine the US Dollar against the Japanese Yen.
Data released by the Conference Board on Tuesday showed the US consumer confidence index fell to 98.7 in September from a revised 105.6 in August. This is the biggest decline since August 2021.
On the other hand, speculation that the Bank of Japan (BoJ) is in no hurry to raise interest rates further could lead to a weaker yen and limit USD/JPY's decline. Bank of Japan Governor Kazuo Ueda said on Tuesday that the central bank can afford to take time to observe developments in financial markets and overseas economies when setting monetary policy.
Trading recommendation: Trade mainly with buy orders at the price level of 143.85. We consider sell orders at the price level of 142.70.
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