USD/JPY rebounds as US Dollar falters; PPI triggers rate cut speculation
The USD/JPY pair exhibited resilience, holding above the 145.00 mark despite a weakened US Dollar, breaking a two-day losing streak. The downbeat US Producer Price Index (PPI) raised prospects of a Federal Reserve rate cut in 2024, impacting the USD’s strength. Meanwhile, Japan’s two-year yield fell below zero for the first time since July 2023, reflecting potential changes in the Bank of Japan’s (BOJ) outlook.
USD/JPY Trading Overview
Pair gains traction, trading at 145.06, up 0.12%
Amid a US bank holiday, the market anticipates a quiet session. The unexpected fall in the US PPI has heightened expectations of a Fed rate cut, impacting the USD/JPY pair. Market odds suggest an 86% chance of a rate cut by March, potentially limiting the Greenback’s upside.
BOJ’s Projections and Impact
BOJ likely to cut core inflation forecast; maintains 2% target
Japan’s two-year yield falling below zero aligns with reports anticipating the BOJ to lower its core inflation forecast for fiscal year 2024. Despite global economic uncertainty, the BOJ is expected to maintain its 2% target. The upcoming quarterly outlook report on January 22–23 will reveal the BOJ’s stance.
Upcoming Events and Analysis
Japanese Machine Tool Orders; US Retail Sales; Key Figures
This week, Japanese Machine Tool Orders and BOJ’s policy will be in focus. The impact of these events, along with the US Retail Sales release, will likely shape trading opportunities around the USD/JPY pair.
USD/JPY Forecast: Central Bank Dynamics and Market Forces
Market reacts to US inflation data; FOMC member views crucial
Central bank dynamics drive USD/JPY movements. US inflation data and FOMC member commentary will be pivotal in shaping market expectations. A closer look at machine tool orders, BOJ’s stance, and FOMC perspectives provide insights into short-term and near-term trends.
USD/JPY Technical Analysis and Price Action
Daily and 4-Hourly Charts; Key Levels
USD/JPY’s daily and 4-hourly charts offer insights into price actions. While the pair remains below the 50-day EMA, it holds above the 200-day EMA, indicating bearish short-term and bullish longer-term signals. Key resistance at 146.649 and support at 144.713 will be critical in determining future trends.
