USD/JPY Analysis: Death Cross Forms Ahead of Fed and BoJ Decisions – 17 September 2024
-- The USD/JPY exchange rate has declined for the second consecutive week, reaching its lowest level since December last year.
-- The pair dropped to the 139.60 support level, down about 14% from its high this year, indicating it has entered a correction phase.
-- According to licensed trading platforms, GBP/JPY and EUR/JPY also fell to 185 and 156, respectively, down more than 10% from their highs this year. Meanwhile, AUD/JPY dropped to 94.42, its lowest since
Fed Rate Decision
The USD/JPY exchange rate fell sharply as investors anticipated the upcoming interest rate decision from the US Federal Reserve. Recent economic figures show that the economy has been slowing, meaning the
Moreover, there are signs that the number of US non-farm payrolls has been weaker than reported. Also, the
Meanwhile, there are signs that inflation in the country is slowing as energy prices fall. Brent crude, the global benchmark, fell to
Therefore, expectations are for the Fed to cut rates by either 0.25% or 0.50% at this meeting. In a note, Bloomberg analysts said: “We believe Fed Chairman
The Fed’s cut will come a week after the
Another major catalyst for the USD/JPY exchange rate will be the Bank of Japan’s upcoming interest rate decision on Friday. Clearly, the decision comes a month after the bank stirred up market turmoil by raising interest rates for the second time this year. Likewise, economists expect the central bank to take a wait-and-see approach at this meeting even as inflation remains stubbornly high.
The latest data showed that the core consumer price index remained at 2.8% in July, above the median estimate of 2.7%. furthermore, It has risen from a low of 2.2% earlier this year. Also, there are signs that the Japanese economy is slowing. The latest economic data showed that GDP expanded by 2.9% in the second quarter, below the expected 3.1%. One of the main concerns for
Japanese carry trade rebounds in yen
The decisions of the
Therefore, the major actions of the Fed and the
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USD/JPY Technical Analysis and Expectations Today:
The daily chart shows that the USD/JPY exchange rate peaked above 160 earlier this year and then experienced a sharp reversal as the BoJ began raising rates. Recently, the pair formed a death cross pattern, where the 200-day and 50-day exponential moving averages crossed. The death cross is one of the most bearish patterns in the market. Additionally, the pair has fallen below the key support level of 141.67, the lowest level in August. Therefore, the pair is likely to continue lower as sellers target the key support level at 137.16, the lowest since July last year.
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Keep an eye on the Fed this week
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