Yen looks unconfident against the dollar | 20 June 2024

An event to look out for today:

15:30 GMT+3. USD - Number of initial applications for unemployment benefits

USDJPY:

The USD and JPY pair is trading above the 158.00 price level during the Asian session today and remains a step away from the highest level since late April reached last week. Nevertheless, the mixed fundamental backdrop calls for some caution before positioning for a continuation of the recent gains seen over the past two weeks.

The Japanese Yen (JPY) is weakened by the Bank of Japan's (BoJ) decision to refrain from discussing the reduction of JGB issuance until its next meeting. In addition, the bullish tone in global stock markets is reducing demand for the safe-haven Yen and providing support to the USD/JPY pair. However, speculation that the Japanese authorities may intervene to support the national currency, along with ongoing geopolitical tensions and political uncertainty in Europe, should limit a significant decline in the yen.

In addition, hawkish remarks from Bank of Japan Governor Kazuo Ueda earlier this week that the central bank may raise rates in July depending on economic data may deter bears from aggressively betting on the JPY. Meanwhile, the US Dollar (USD) continues to struggle to attract meaningful buyers and languishes near weekly lows amid expectations that the Federal Reserve (Fed) will cut interest rates twice this year, backed by signs of fading inflation. This could help to contain the USD/JPY pair.

Today, market participants pay attention to the economic agenda in the US, where, as usual, initial jobless claims, the Philadelphia Fed manufacturing index and housing market data - building permits and housing starts - will be released. These data, as well as the US bond yields and the Fed's speech will influence the USD price dynamics and will give some impetus to the USD/JPY pair. Traders will focus on broader risk sentiment to capitalize on short-term opportunities ahead of the release of Japanese core CPI and global PMIs on Friday.

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

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