A hawkish blitz from the Federal Reserve | 17 January 2022

17 January 2022, USD/JPY

USDJPY trading plan:

A hawkish new year blitz from the U.S. Federal Reserve in the face of 7% inflation and near full employment readings stateside has markets scrambling to price as many as four U.S. interest rate rises this year. But more pressing for many in financial markets are Fed signals that it's already time to siphon off some of the money it flooded into the banking system via emergency bond buying - money aimed at keeping the wider economy afloat during the shocking pandemic lockdowns. Quantitative tightening should be forceful at $100 billion a month, twice the monthly pace of the last balance sheet reduction in 2017-2019.This is a positive signal for the dollar.

Investment idea: buy 114.20 and take profit 114.86.

David Johnson
Analyst of «FreshForex» company
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