- After three consecutive trading sessions, the price of the USD/JPY was subjected to strong selling pressure, starting from the resistance level of 151.70 obviously, its highest level in a year, with losses extending to the support level of 149.18.
- Moreover, the currency pair tried to compensate for its losses by moving towards the resistance level of 149.97 at the time of writing the analysis.
- The opportunities to move towards and above the psychological resistance of 150.00 remain strong as the Bank of Japan remains committed to its ultra-loose monetary policy, and this was confirmed at the beginning of trading this week by the Governor of the Bank of Japan.
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US Interest Rates Are Likely to Be Raised Again in 2024
On the other hand, the pace of economic data from the United States will decline in the coming days, which means that there will be a greater focus on the guidance provided by members of the Federal Reserve. Among our interests is FOMC member Waller, who is scheduled to speak at 15:00 GMT on Tuesday, followed by Williams at 17:00. However, it will be Federal Reserve Chairman Powell who will be the most anticipated speaker with speeches on Wednesday at 14:15 and again on Thursday at 19:00. Therefore, some of the speeches will not be related to monetary policy, but since Powell will be speaking twice, we can expect some reference to the economy and interest rate expectations.
Recently, the Federal Reserve kept US interest rates unchanged last Wednesday and said that interest rates are likely to be raised again. However, the Fed appeared to reject the prospects of a rate hike in December, which was a “pessimistic” outcome consistent with the weakness of the US dollar.
Particularly, US Fed Governor Powell said, “Given how far we have come [on interest rates and declining inflation, along with the uncertainty and risks we face, the committee is acting cautiously.” Powell also appeared to dismiss the benefit of September's "dot" chart, which indicated the Fed would prefer to raise interest rates again this year. Also, Powell said that the effectiveness of the points scheme “wanes between meetings.” Therefore, the extent to which this issue is confirmed this week will be important for the US dollar.
USD/JPY Outlook
As I mentioned before, the continued discrepancy between the US Federal Reserve’s strict policy and the Bank of Japan’s accommodative Bank of Japan will continue to support opportunities to buy the USD/JPY pair from every falling level. Moreover, according to the performance on the daily chart below, the closest support levels for the currency pair are 149.20, 148.45, and 147.70, respectively. On the other hand, over the same period, the movement of the currency pair above the psychological resistance of 150.00 will be important for bulls to control and prepare for a stronger upward move. The next resistance levels will be 150.85, 151.70, and 153.00. Shortly, consider the possibility of Japanese intervention in the markets to prevent further collapse of the currency price.
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