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USDJPY:
The Japanese Yen (JPY) experienced a slight decline during the Asian session on Wednesday, reacting to domestic data that fell short of expectations. However, the decline was not followed by significant selling as traders showed indecision in anticipation of the Bank of Japan’s (BoJ) decision. The Japanese central bank is expected to maintain its short-term interest rate at 0.50 per cent, amid uncertainty surrounding US President Donald Trump’s trade policy and its potential impact on the economy. Investors will therefore be looking for signals on the timing and magnitude of future rate hikes by the Bank of Japan.
Investors will then shift their attention to the outcome of the two-day Federal Open Market Committee (FOMC) meeting, which will be announced later in the US session. The US central bank is also expected to leave interest rates unchanged, although markets are pricing in the possibility of three 25 basis point rate cuts before the end of this year. This represents a significant divergence from the Bank of Japan’s hawkish stance, which has led to the recent narrowing of the US-Japan rate differential, and should continue to support the lower-yielding Japanese Yen.
Trade recommendation: BUY 149.60, SL 149.00, TP 150.30
Origin: FreshForex
