USDJPY:
After the Fed’s rate cut, the U.S.–Japan yield differential narrowed slightly, supporting the yen and capping USD/JPY. The focus now is on tomorrow’s Bank of Japan meeting: the base case is unchanged policy settings, with heightened attention to assessments of inflation and wages as well as comments on the balance of risks over the coming months.
Even without immediate BoJ steps, expectations of further normalization of monetary policy in Japan later this year periodically boost demand for the yen. At the same time, the dollar enjoys short-term support after the Fed decision, though it is constrained by messaging about a gradual approach going forward, which limits the potential for a sustained rise in the pair.
Overall, the balance of factors tilts toward a tactical decline in USD/JPY, while warranting caution given the pair’s sensitivity to BoJ communication and U.S. yield dynamics. Selling with a moderate stop-loss and a conservative target is preferred.
Trade recommendation: SELL 146.90, SL 147.40, TP 146.00
Origin: FreshForex
