USDJPY retested six-month highs of 154.70 on Thursday, before subsiding by 0.9 percent to trade at 153.22 at the time of writing as traders waited for the Federal Reserve to pronounce itself on the new interest rate. The pair gained 1.99 percent on Wednesday with the dollar strengthened by Donald Trump’s election victory.
The Federal Reserve is expected to cut interest rates by 0.25 percent later in the New York trading session, which reduces the USDJPY upside potential. However, some of Trump’s economic policies are viewed as inflationary. Particularly, tariff hikes and increased fiscal deficit are expected to support the dollar in the coming months, as the Fed will likely be reluctant to slash interest rates further.
Meanwhile, yields on US treasury bonds fell further during the day, with benchmark 10-year bonds down by 6.1 basis points to 4.365 percent. That will limit the upside for the greenback. However, the dollar has support from upbeat Initial Jobless Claims figures which came out earlier in the New York session.
The number of people filing for jobless insurance came in at 221k for the week ending October 31, less than the forecast figure of 223k. Japan will release its monthly Household Spending figures after the Fed decision, and that could inject new propulsion into the USDJPY pair.
On the chart below, USDJPY signals a continuation of the downside if resistance persists below the pivot mark at 153.03. With that, the first support will likely be at 153.20. However, if the sellers extend their control, USDJPY could break below the first support and test 153.15.
Conversely, moving above 153.03 will trigger bullish momentum, which could see the pair encounter the first resistance at 153.42. However, if the momentum strengthens further, it could breach that hurdle, invalidate the downside narrative and test 153.74.
This post was last modified on Nov 07, 2024, 16:25 GMT 16:25