- The BoJ’s Ueda reaffirmed his commitment to raising rates if inflation rises sustainably.
- Economists believe that Japan’s central bank will raise rates once again before the end of the year.
- Powell’s speech could contain hints about the size and pace of future moves.
The outlook for USD/JPI is slightly bearish as the yen strengthens following hawkish comments from Bank of Japan Governor Kazuo Ueda. Meanwhile, the US dollar was under pressure ahead of Powell’s speech at the Jackson Hole Symposium.
-Are you interested in learning more about the Forex Signal Telegram Group? Click here for details –
On Friday, the BoJ’s Ueda had to explain before parliament why the central bank surprised markets by raising rates at its last meeting. He reaffirmed his commitment to raising rates if inflation rises in a sustainable manner. Economists believe that Japan’s central bank will raise rates once again before the end of the year. The latest interest rate hike sent global markets into turmoil as investors shortchanged the popular company.
Initially, investors borrowed the low-yielding yen to buy high-yielding US assets. However, when the Bank of Japan began to tighten monetary policy, investors panicked. However, Ueda’s tone indicated that policymakers are prepared to continue raising borrowing costs.
Meanwhile, in the US, Fed policymakers on Thursday backed the prospect of a rate cut next month. They lowered their previous cautious tone, indicating confidence that inflation will reach the 2% target. At the same time, markets imply a 73.5% chance that the central bank will cut rates by 25 basis points.
The focus is now on the Jackson Hole Symposium. Powell’s speech could contain hints about the size and pace of future moves. Investors are likely to be more responsive to policy cues after September.
USD/JPI Key Events
- Fed President Powell is speaking
- Jackson Hole Symposium
USD/JPI technical outlook: Price is consolidating around 0.382 Fib
On the technical side, the USD/JPI price rose to retest the 30-SMA resistance. However, the bias remains bearish as it remains below the SMA and the RSI is just below 50. However, there is little enthusiasm to make a big move.
-If you are interested in Forex day trading, please read our getting started guide-
Neither the bears nor the bulls are ready to push the price too far from the SMA. This is a sign of indecision. At the same time, the price remained close to the 0.382 Fib level. If the bears regain momentum, USD/JPI will jump lower to the 142.56 support level. Otherwise, it could break above the SMA to retest the 149.01 resistance.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
