USDJPY:
The Japanese yen (JPY) continues its sideways consolidation against the broadly weaker US dollar (USD) during Tuesday’s Asian session, as traders prefer to wait for this week’s key central bank events. The Federal Reserve (Fed) is set to announce the results of its two-day meeting on Wednesday, followed by an important decision from the Bank of Japan (BoJ) on Friday. Meanwhile, uncertainty over the likely timing and pace of rate hikes by the Bank of Japan, coupled with the prevailing risk-on sentiment, is acting as a drag on the safe-haven JPY.
However, any significant decline in the JPY still seems unlikely amid growing recognition that the Bank of Japan will stick to its policy normalization course. This contrasts sharply with growing bets on more aggressive easing by the Fed, which is keeping the US dollar close to its July 24 low and should help cap the USD/JPY pair. Nevertheless, fundamentals appear to favor yen bulls and suggest that the path of least resistance for the currency pair remains downward.
Trade recommendation: SELL 146.70, SL 147.90, TP 145.15
Origin: FreshForex
