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USD/JPY loses positions due to differences in the policies of the two central banks

USD/JPY loses positions due to differences in the policies of the two central banks | 26 August 2024

26 August 2024, USD/JPY

USD/JPY loses positions due to differences in the policies of the two central banks

USDJPY:

The Japanese Yen (JPY) continues to strengthen for the second consecutive day as Bank of Japan Governor Kazuo Ueda's hawkish remarks contrast with Federal Reserve Chair Jerome Powell's dovish stance.

BoJ Governor Ueda stated in Parliament on Friday that the central bank could raise interest rates further if its economic projections are accurate. Additionally, July’s National Consumer Price Index (CPI) inflation data remained at its highest level since February, reinforcing the BoJ’s hawkish stance on its policy outlook.

The US Dollar (USD) depreciates due to rising odds of a rate cut in September. Fed Chair Jerome Powell stated at the Jackson Hole Symposium, "The time has come for policy to adjust." Although, Powell did not specify when rate cuts would begin or their potential size.

Traders anticipate the US central bank may reduce rates by atleast 25 basis points in September. According to the CME FedWatch Tool, markets are now fully anticipating at least a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting.

Trading recommendation: Trade predominantly with Sell orders from the current price level

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David Johnson
Analyst of «FreshForex» company
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