USDJPY:
The Japanese yen (JPY) extended its significant losses from the previous day and fell to a new low against the US dollar on Tuesday during the Asian session, the lowest since early August. The unexpected outcome of Japan’s leadership election puts the country on a path toward more expansionary fiscal policy, which could further complicate the Bank of Japan’s (BoJ) task. Traders reacted quickly and began to rule out the possibility of an interest rate hike by the Bank of Japan at the end of this month, which continues to undermine the yen.
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Meanwhile, optimism has lifted Japan’s Nikkei 225 index to a new record high and has been another factor driving investors away from the yen as a safe-haven currency. However, data released earlier today shows that household spending in Japan grew faster than expected in August, confirming the need for further tightening by the Bank of Japan and helping to limit a deeper fall in the yen. On the other hand, the US dollar (USD) is struggling to attract buyers amid expectations of a dovish Federal Reserve (Fed) policy and may contribute to limiting the growth of the USD/JPY pair.
Trade recommendation: BUY 150.80, SL 149.60, TP 151.80
Origin: FreshForex
