06 February 2024, USD/JPY
USDJPY:
During Tuesday's Asian session, the Japanese yen (JPY) rose and recovered some of the losses it had incurred over the past two days, reaching the year-to-date low against the US currency the day before. Geopolitical risks and China's economic problems have led to investors being cautious about risky assets, as they bet that the Federal Reserve (Fed) will not cut interest rates as much as expected. Furthermore, the Bank of Japan's (BoJ) assertive stance, which indicates its confidence in achieving its inflation target and prepares for interest rates to rise above negative levels in its upcoming meetings in March or April, is bolstering the Japanese Yen. As a result, the USD/JPY pair is under some pressure, although the decrease seems to be mitigated by bullish sentiment towards the US Dollar (USD).
Recent macroeconomic data from the US suggests that the economy is performing well, providing the Fed with greater flexibility to maintain higher interest rates. Furthermore, remarks from several influential FOMC members, including Fed Chair Jerome Powell, have reaffirmed a bullish outlook that is driving US Treasury yields higher and supporting the USD. Furthermore, the recent increase in the US-Japan interest rate differential may continue to reduce the demand for the Japanese Yen and limit any significant downward correction in the USD/JPY pair.
Trade recommendation: Trade buy orders from the current price level
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