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USD/JPY Struggles Near 148.975 Amid Fed Rate Cut Speculations

USD/JPY Price Chart - Source: Tradingview

Despite dovish comments from BoJ’s Uchida and prevailing risk-on sentiment, the USD/JPY pair remains subdued, hovering around the 109.00 mark, unable to capitalize on the market’s optimistic mood.

The pair’s downward trajectory is primarily attributed to a weakening US dollar, which faltered amidst the prevailing risk appetite among investors. Adding to the bearish outlook for the USD/JPY pair is the ongoing speculation regarding potential interest rate cuts by the Federal Reserve.

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Despite positive economic indicators from the US, including a drop in Initial Jobless Claims to 218K, and expectations surpassing the forecast of 220K, the dollar’s strength is compromised by the uncertainty surrounding the Federal Reserve’s monetary policy direction.

Despite an economy that is showing resilience and ongoing inflation concerns, Federal Reserve officials’ cautious approach to rate adjustments continues to have a significant impact on market sentiment.

Dallas Fed President Lorie Logan’s recent statements underscored the absence of immediate pressure to reduce interest rates, highlighting progress in inflation control but emphasizing the need for further evidence before any substantial policy shifts.

This cautious approach by the Federal Reserve is a critical factor in the USD/JPY pair’s current performance, as traders navigate through the uncertainties of US monetary policy and its implications on currency valuations.

The juxtaposition of dovish central bank perspectives and anticipatory market sentiment creates a complex landscape for the USD/JPY pair, with potential for limited losses should the dollar find footing amid these policy deliberations.

USD/JPY Price Forecast: Technical Outlook

The USD/JPY pair is currently navigating a cautious path, with a slight decline of 0.10%, positioning itself at 149.142. This subtle movement is nested between a series of technical thresholds that dictate its short-term trajectory.

The pivot point for today is identified at 148.972, a level that is crucial for determining the directional bias of the currency pair. Resistance levels are marked at 149.698, 150.338, and 150.958, which could challenge the pair’s ascent.

USD/JPY Price Chart

On the flip side, support is firmly established at 148.231, with further cushions at 147.632 and 146.680 potentially halting any downward pressure.

The Relative Strength Index (RSI) at 60 hints at bullish sentiment, while the 50-day Exponential Moving Average (EMA) at 148.450 provides additional support, reinforcing a positive outlook for the USD/JPY pair as long as it remains above the pivot point of 148.972.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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