14 October 2024, USD/JPY
USDJPY:
The Dollar-Yen pair extends its upside potential to 149.20 on Monday in the early hours of Asian trading. A stronger US Dollar (USD) and uncertainty over the Bank of Japan's monetary policy stance provide some support for the pair.
Doubts about how aggressively the Bank of Japan will raise rates are weighing on the Japanese Yen (JPY) against the USD. The Bank of Japan removed negative interest rates in March and raised the short-term benchmark to 0.25% in July. BOJ Governor Kazuo Ueda signaled the central bank's willingness to keep raising interest rates if economic and price developments are in line with its forecasts. Nevertheless, uncertainty over Japanese Prime Minister Shigeru Ishiba's stance on monetary policy could complicate the decision to raise borrowing costs.
Ongoing geopolitical tensions in the Middle East could push safe-haven currencies such as the yen higher and limit the pair's gains. CNN reported on Sunday that at least four Israeli soldiers were killed and more than 60 injured in a drone attack in north-central Israel, with Hezbollah claiming responsibility for the attack.
Producer Price Index (PPI) data released on Friday indicated a continued favorable inflation outlook and supported expectations of a Federal Reserve (Fed) rate cut next month. However, the prospect that the Fed will not cut rates as much as expected could support the dollar.
Meanwhile, the U.S. Dollar Index (DXY), which tracks the dollar against a basket of currencies, is trading near its highest level since mid-August above the psychological 103.00 mark. According to the CME FedWatch Tool, traders estimate the probability that the Fed will cut interest rates by 25 basis points (bps) in November at about 88.6%.
Trading recommendation: Trade mainly with Buy orders from the current price level.
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