USD/JPY Faces Bearish Pressure Amid Shift in BoJ Policy and Fed Rate Outlook
The Japanese Yen (JPY) continues to appreciate against the US Dollar (USD) for the third consecutive day, buoyed by increasing expectations of a policy shift from the Bank of Japan (BoJ). Recent inflation data from Japan indicates progress towards sustained inflationary trends, paving the way for the BoJ to contemplate normalizing its expansive monetary policy.
Additionally, the potential for a global recession enhances the appeal of the safe-haven JPY, contributing to the USD/JPY pair’s descent to around the 148.00 mark during Tuesday’s Asian session.
Concurrently, the USD is experiencing a decline to a near three-month low, amidst growing consensus that the Federal Reserve (Fed) may halt interest rate hikes and could commence policy easing as soon as the first half of 2024, further dampening sentiment around the major currency pair.
The market focus now shifts to upcoming key economic releases. Investors await the BoJ’s core CPI data for immediate direction, ahead of the Conference Board’s US Consumer Confidence Index and multiple Federal Open Market Committee (FOMC) member speeches slated for the North American session.
However, significant attention is directed towards the preliminary estimate of US GDP growth for the third quarter, due on Wednesday, and the US Core PCE Price Index— the Fed’s preferred inflation measure—scheduled for Thursday.
USD/JPY Technical Outlook
The USD/JPY pair achieved the anticipated target at 148.30, breaking below this level and closing the last four hours below it, reinforcing the likelihood of continued bearish momentum in the upcoming sessions.
This move opens the path for further bearish corrections on an intraday and short-term basis, with subsequent negative targets at 146.90 and 146.17. Today’s expectations lean towards a continued decline, contingent on the pair maintaining below the 149.70 level to sustain the projected bearish trend.
The expected trading range for the day is between 147.30 support and 148.80 resistance, with an overall bearish trend anticipated.
USD/JPY Live Chart
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