USDJPY:
Small bets on a Fed rate cut support the dollar and provide some support for USD/JPY.
The Japanese Yen (JPY) strengthened against its US counterpart on Tuesday and rolled back most of the previous day’s losses to its lowest level since early August. Overnight declines in US equity markets, as well as lingering geopolitical risks, proved to be key factors that sent flows rushing towards the safe-haven yen. Nevertheless, uncertainty over the Bank of Japan’s (BoJ) rate hike plans held back significant appreciation.
Adding to this, disappointing Japanese August Core Machinery Orders data is contributing to the JPY’s decline in Wednesday’s Asian session. Meanwhile, the US Dollar (USD) is holding near its highest level in over two months amid expectations that the Federal Reserve (Fed) will continue to moderate interest rate cuts over the next year. This is helping the USD/JPY pair to hold near the 149.00 level and making the JPY bulls cautious.
From a technical perspective, any further decline is likely to find decent support around 148.60-148.55. However, some follow-through selling could leave the USD/JPY pair vulnerable to further weakening below the 148.00 round figure and testing last week’s low around 147.35. The latter is followed by 147.00, the break of which would mean that the recent gains seen over the past month have exhausted themselves and would open the way for deeper losses.
Trade recommendation: Following the level of 149.00, at fixation below consider Sell position, at rebound consider Buy position
Origin: FreshForex
