USDJPY:
The Japanese Yen (JPY) started the new week on a positive note amid a global flight to safety fuelled by renewed trade war fears and a hawkish interest rate hike by the Bank of Japan (BoJ) on Friday. In addition, hopes that spring wage talks will lead to a significant rate hike this year and allow the BoJ to tighten policy further were another factor supporting the yen. This, in turn, led the USD/JPY pair to dip below the mid 155.00s during the Asian session and near a one-month low, although moderate gains in the US Dollar (USD) may help limit losses.
Meanwhile, bets that the Federal Reserve (Fed) will cut borrowing costs twice this year, fuelled by US President Donald Trump’s call for lower interest rates, triggered a fresh round of declines in US Treasury yields. The narrowing yield differential between the US and Japan supports the outlook for further gains in the lower-yielding yen, suggesting that the path of least resistance for the USD/JPY pair remains to the downside. Traders are now looking forward to the release of US macroeconomic data to capitalise on short-term opportunities later in the early North American session.
Trading Recommendation: Watch the level of 156.00, if the pair consolidates above, consider Buy positions, if the pair rebounds, consider Sell positions.
Origin: FreshForex
