USD/JPY Slips On Fed Rate Cut Bets, Weak USD

Fundamental Analysis

* Surging Odds: The USD/JPY pair continues to slide during the Asian session as the dollar weakens. The US Dollar (USD) hit a new weekly low, driven by growing expectations of more aggressive easing by the Federal Reserve (Fed) next week. This sentiment was reinforced by Wednesday’s lower-than-anticipated US Producer Price Index (PPI) data. Markets are now factoring in over a 40% chance that the Fed will cut interest rates by 50 basis points at its September meeting. This outlook has kept US Treasury yields near their 2024 lows, applying downward pressure on the dollar and pulling the USD/JPY pair lower. Meanwhile, the Japanese Yen also gained further support from hawkish signals from the Bank of Japan (BoJ), which hinted at further rate hikes if the economic outlook aligns with forecasts.

Technical Analysis

* Technical Breakout: USDJPY was traded lower while currently testing the support level 141.10. MACD which illustrate strong bearish momentum signal suggest the pair to likely further extend its losses after it breaks below the level.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 139.200 after it breach below the level 141.10. Conversely, a potential reversal is also to be expected and the price could head back towards the level 142.850.

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Potential Risks

With no significant economic data on today’s docket, traders are likely to continue analyzing recent releases while moving to the sidelines and focus on key central bank events next week. The Federal Reserve will announce its policy decision at the conclusion of its two-day meeting on Wednesday, followed by the Bank of Japan’s (BoJ) policy update on Friday.

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Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.