- Overall, the USD/JPY currency pair has been trading upwards this week, with gains reaching the 148.90 resistance level, the highest in over two months, and is stabilizing around 148.00 at the time of writing the analysis.
- Obviously, the limited performance of forex market price movements is due to the quiet economic calendar this week.
- Investors are still reacting to the recent hawkish US Federal Reserve announcement and the stronger-than-expected US jobs figures.
- With no major catalyst to drive the dollar lower, the pullback could be profit-taking following the rally triggered by Friday's stunning US jobs data and reinforced on Monday by a strong ISM non-manufacturing survey.
On another level, US Federal Reserve Chairman Jerome Powell's comments over the weekend may also have helped the global reserve currency, as the Fed chief said the committee could be "prudent" in deciding when to start lowering borrowing costs as a strong economy gives them time to build confidence. That inflation is under control. Moreover, his view was echoed by Minneapolis Fed President Kashkari and Cleveland Meister, with the former saying they are “not done yet” with inflation, while the latter noted that although the door to lower interest rates could open if the economy performs The US is as expected, and it is too early to decide on the timing.
Although Meester and Kashkari's comments did not boost the price of the US dollar further, this whole mix of data and observations led to a noticeable re-pricing regarding the future course of action of the US Federal Reserve. After confirming a rate cut in March, investors now assign only a 20% probability to such a move, with the total number of basis points for rate cuts by the end of the year falling to 120.
Meanwhile, this suggests that the question on investors' minds now is not whether the world's largest economy will avoid recession, but whether it will accelerate again. With other major economies lagging behind the US, the US dollar may rebound and continue its prevailing upward trend if data and Fed officials continue to pour cold water on the market's implied interest rate path.
According to Forex currency trading platforms, the price of the US dollar stabilized near the highest level in three months, supported by rising Treasury yields, amid growing expectations that the Federal Reserve is unlikely to cut US interest rates aggressively this year. The US Dollar Index, which measures the performance of the US currency against six major competing currencies, reached the resistance level of 104.42, after touching 104.60 on Monday, its highest level since November 14. In general, the US dollar index has risen by 3% since the beginning of the year until now, after declining by 2% in 2023.
USD/JPY Technical Analysis and Expectations Today:
According to the performance on the daily chart above, the upward channel for the currency pair US Dollar against the Japanese Yen “USD/JPY” is still valid. As we mentioned before, the stability of the currency pair above the 148.60 resistance will support the next stronger upward move towards the psychological resistance 150.00, especially if the clear discrepancy between the central bank’s policy continues. The hawkish US and the Bank of Japan, which still adheres to its negative interest policy. Therefore, we still prefer to buy the USD/JPY pair from every falling level.
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