Since the start of this week's trading, the price of the USD/JPY currency pair is in an upward retracement. It has settled towards the resistance level 137.49 at the time of writing the analysis.
- Recovering from the support level 133.63 last week, the rebound came in the first place amid the improvement in the results of the US economic data.
- It came from the US job numbers at the end of last week to the reading of the US services sector and the trade balance yesterday.
- The currency pair is recovering from the strong selling it was exposed to, amid the calming down of the tightening tone on the part of US Federal Reserve officials led by Jerome Powell.
US stock markets fell back as stronger-than-expected readings on the US economy sparked fears that the Federal Reserve has ways to go to control inflation. The Fed does this by deliberately slowing the economy as interest rates rise.
Closely Watching Economic Date
Investors are trying to determine whether inflation is falling at a pace that will allow the Federal Reserve to moderate interest rate increases. The Fed's policy risks hitting the brakes on the economy too hard and sending it into recession. The Federal Reserve will meet next week and is expected to raise US interest rates by half a percentage point. It has raised the benchmark interest rate six times since March, pushing it into a range of 3.75% to 4%, the highest rate in 15 years. Wall Street markets expect the benchmark price to reach a peak range of between 5% and 5.25% by mid-2023.
Forecasts of the US dollar against the Japanese yen today:
Despite the recent rebound, the general trend of the USD/JPY currency pair is still bearish. There will be no opportunity, according to the performance on the daily chart below, to initially turn upwards without breaching the psychological resistance 140.00 again. This may be possible if readings of the US economic data results come coming is also positive.
I still prefer to buy the dollar yen pair from every downside level and the closest support levels, according to performance, are currently 136.45 and 135.00, respectively. Investor sentiment towards risk appetite or not will have an impact on the performance of the dollar / yen pair today. The divergence in the future of central bank monetary policy and economic performance will ultimately be in favor of the US dollar.
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