Tightening by the Fed | 04 January 2022

04 January 2022, USD/JPY

Tightening by the Fed

USDJPY trading plan:

U.S. Treasury yields advanced, as investors still priced in an interest rate hike by mid-2022 despite the surge in COVID cases after the holidays. Yields on U.S. two-year notes, which are sensitive to rate hike expectations along with 5-year notes, soared to their highest level since March 2020. Benchmark U.S. 10-year and 5-year yields rose to six-week peaks. The market viewing the Federal Reserve as still being likely to hike by mid-2022 despite the surge in COVID cases. Futures on the federal funds rate on Monday have fully priced in a quarter-percentage-point tightening by the Fed by May this year. Fed funds futures are also betting on three hikes next year consistent with the Fed's new economic projections.

Investment idea: buy 114.94 and take profit 115.50.

David Johnson
Analyst of «FreshForex» company
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