- The yen has recovered from last week, when it hit a 38-year low.
- Investors are speculating about a July BoJ hike.
- There is a 76% chance the Fed will cut borrowing costs in September.
USD/JPI price analysis shows a slightly bearish trend, with the yen holding steady after recovering from a 38-year low. Meanwhile, the dollar rallied modestly on Tuesday, just in time for Fed Chair Powell’s upcoming testimony.
–Are you interested in learning more about Bitcoin price prediction? Check out our detailed guide-
The yen has recovered from last week, when it hit a 38-year low. The return was due to the fear of intervention. At the same time, there was more pressure on the Bank of Japan to raise interest rates. A weak yen has led to higher import costs, which increases inflation.
The recent decline has increased bets that the BoJ will be ready to raise interest rates in July. Market participants also expect the central bank to announce plans to taper bond purchases. Therefore, the July meeting could use the yen.
On the other hand, the dollar rallied on Tuesday as investors awaited more clues on the Fed’s rate cut prospects. Powell will speak later in the day. His last speech was a bit more dovish, as he acknowledged that inflation was falling and said that would pave the way for interest rate cuts.
After last week’s jobs report, there is a better than 76 percent chance the Fed will cut borrowing costs in September. The economy created fewer jobs in June, and the unemployment rate increased. Investors will now be watching the upcoming consumer inflation numbers to see if the downward trend in inflation is consistent. If so, the probability of a cut in September will increase.
USD/JPI Key Events Today
- Fed Chairman Powell’s speech
USD/JPI Price Technical Analysis: Price is retesting the 30-SMA after bearish decline
On the technical side, the USD/JPI price has broken below the 30-SMA and is currently retesting it as resistance. A break below the SMA indicated a change in bearish sentiment. At the same time, the RSI showed a shift to solid bearish momentum when it broke below 50.
–Are you interested in learning more about crypto robots? Check out our detailed guide-
Therefore, if the SMA remains firm as resistance, the price will fall to make a lower low. As a result, it can break below the 160.00 support level. This would pave the way for a retest of the 158.00 support level. On the other hand, if the price moves back above the SMA, it would retest the 162.01 resistance or continue higher.
Do you want to trade Forex now? Invest in eToro!
68% 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.
