USD/JPY Supported on Fed Path Uncertainty Ahead of the NFPs
USD/JPY Analysis
The US Fed had made a dovish shift last month, as it hinted to peak rates and signaled at least three cuts in the current year [1]. Wednesday's accounts of that decision reaffirmed that "almost all participants" see lower rates ahead. However, they noted "an unusually elevated degree of uncertainty" [2], which kept prospects of further tightening on the table, casting some doubt over the policy path.
USD/JPY started the new year on the front foot and the Fed minutes are supportive, not long after the its Japanese counterpart had maintained its ultra-loose stance. The pair tries to take out the critical 114.70 region where the EMA2000 and the 38.2% Fibonacci of the las leg down converge. Successful effort would bring 149.15 in the spotlight, but we are cautious around the ascending prospects.
The Fed has touted the need for a restrictive stance and has not taken more tightening in play, but its projections point to a pivot and lower rates this year, even if swallower than market pricing. The Bank of Japan may have maintained its accommodative setting, but is moving towards normalization. This shift in policy dynamics has led the pair to tow straight losing months. Below the aforementioned crucial resistance, USD/JPY is in risk of fresh lows (140.24). The next leg of the move will likely be determined by Friday's US Jobs report.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 04 Jan 2024 https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20231213.pdf | |
| Retrieved 06 May 2024 https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20231213.pdf |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.