11 September 2024, USD/JPY
Event to pay attention to today:
15:30 GMT+3. USD - Consumer Price Index
USDJPY:
The USD/JPY currency pair is still under pressure from selling for the second consecutive day on Wednesday. However, it has found support near 142.00 and has recovered a few pips over the past hour. The current spot price is trading around 142.30, which is close to the one-month low reached last week.
The decline is being driven by contrasting monetary policies from the Bank of Japan (BoJ) and the Federal Reserve (Fed), which is continuing to facilitate the unwinding of carry trades and directing flows towards the Japanese Yen (JPY). Indeed, BoJ Governor Kazuo Ueda has reiterated his willingness to maintain the current interest rate level if the Japanese economy meets the central bank's economic forecasts through fiscal 2025.
In contrast, the market is fully anticipating a 25-basis-point interest rate cut by the Fed at its upcoming meeting on 17-18 September. This ultimately hindered the US dollar (USD) from consolidating the levels achieved over the past three days. Furthermore, the cautious market sentiment is supportive of the Japanese Yen's safe-haven status, exerting downward pressure on the USD/JPY pair.
The aforementioned fundamental backdrop favours bearish traders and suggests that the path of least resistance for spot prices lies on the downside. However, investors may prefer to wait for the release of the important US Consumer Price Index (CPI) report to gain insight into how the Fed will cut rates. This will play a pivotal role in influencing USD price action in the near term and will provide fresh impetus to the USD/JPY pair.
Trade recommendation: Trading predominantly Sell orders from the current price level.
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