- Investors are speculating ahead of key speeches from top policymakers at the Fed and the Bank of Japan.
- Markets are implying an over 70% chance of a September Fed rate cut of 25 bps.
- A Reuters poll on Wednesday found that most economists expect the BoJ to raise rates again this year.
USD/JPI price analysis is slightly bullish as the dollar recovers ahead of the FOMC policy meeting minutes. At the same time, investors are speculating ahead of key speeches by top policymakers from the Fed and the Bank of Japan.
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The US dollar has fallen since the start of the week as traders fully priced in the Fed’s rate cut at its September meeting. However, consumer inflation rose modestly in July, reducing bets on a 50 bps rate cut. Still, there is over a 70% chance of a smaller cut of 25 bps.
Traders are on edge, waiting to see if policymakers will support this outlook. The FOMC minutes will show how officials decided to hold rates at the last meeting and their confidence levels with inflation progress.
Experts believe that the market is very dovish. Therefore, any signs that policy makers are less dovish could benefit the dollar. Powell will speak Friday at a symposium in Jackson Hole. Investors will be listening closely for hints about the size and pace of future rate cuts. If it sounds cautious or less dovish than expected, it could cause the dollar to rally.
Meanwhile, Bank of Japan Governor Kazuo Ueda will also speak on Friday. Markets will wait to see if he signals another rate hike and supports the yen. A Reuters poll on Wednesday showed most economists expect the Bank of Japan to raise rates again this year.
USD/JPI Key Events Today
USD/JPI Technical Price Analysis: Bears struggle to break away from Fib resistance at 0.382
On the technical side, the price of USD/JPI is recovering after making a new low. However, the bearish bias remains intact, with price below the 30-SMA and RSI below 50. Bears recently broke below the 0.382 Fib level.
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Cena is now trying to break away from this level but continues to pull back. If the bears regain momentum, USD/JPI is likely to fall to the 142.56 support level. On the other hand, if the bulls take control with a break above the 30-SMA, the price could increase to the resistance level of 150.03.
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