Recession or no recession? | 17 August 2023

17 August 2023, USD/JPY

Recession or no recession?

USDJPY trading plan:

A so-called soft-landing economic path – in which the Federal Reserve manages to curb inflation without causing output to contract – has gained more consensus in recent weeks, prompting some investors to take on more risk or reduce bets that safe-haven assets such as Treasuries would rally. Treasuries generally become more valuable, which means their yields decline, during periods of economic weakness, but long-term yields have spiked in recent weeks, with the benchmark 10-year hitting an almost 10-month high. Rising optimism around a soft-landing, however, comes with several caveats, making it difficult for traders to embrace the prevailing macroeconomic outlook with conviction.

Investment idea: buy 145.90 and take profit 146.60.

David Johnson
Analyst of «FreshForex» company
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