USD/JPY Fell Amid BoJ Rate Hike Expectation

Fundamental Analysis

* BoJ Hike Bets: The Japanese yen has gained ground against the dollar as market participants reevaluate their positions, factoring in the likelihood of a future rate hike from the Bank of Japan (BoJ). The economic data released on Friday highlighted that Japan’s Core Consumer Price Index (CPI) surged to a 10-month peak, reaching 3.0% in August, up from 2.8% in July. This uptick in inflation has solidified expectations that the BoJ, which has been relatively cautious about tightening its monetary policy, may take a more hawkish stance and implement another interest rate hike in 2024. The rising inflationary pressure is seen as a key driver for this shift, prompting traders to adjust their forecasts accordingly.

Technical Analysis

* Technical Breakout: USDJPY was traded lower following prior retracement from the resistance level 143.750. MACD which illustrate persistent bearish momentum signal suggest the pair to likely further extend its losses.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 141.050. Conversely, a potential reversal is also to be expected and the price could head back towards the level 143.750.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving ahead, investors will focus on the upcoming BoJ Interest Rate Decision where market participants will be closely watching for any shifts in the policy statement that might offer clues about when the bank plans to raise rates next.

Know how to manage trading risks with risk management strategies.

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.