26 February 2024, USD/JPY
Event to watch out for today:
17:00 EET. USD - New Home Sales
USDJPY:
The Japanese yen (JPY) rose against the US dollar during Monday's Asian session, but remains close to the multi-month low reached last week. Investors are worried about geopolitical risks arising from conflicts in the Middle East and the ongoing war between Russia and Ukraine. This, along with speculation that the Japanese authorities will intervene in the market to support the national currency, provides some support for the safe-haven Yen. However, traders are refraining from making aggressive bullish bets on the JPY due to expectations that the Bank of Japan (BoJ) will postpone its plans to end ultra-loose policy because of a technical recession in Japan.
Meanwhile, the USD managed to remain above the multi-week low reached last Thursday. This is due to bets that the Federal Reserve (Fed) will start cutting interest rates later than previously expected. Investors have delayed their expectations for the Fed's first rate cut to June. Markets now align with the Fed's projections of three 25 basis point rate cuts this year, which has led to rising US Treasury yields. This supports the dollar and limits the decline of the USD/JPY pair. Traders are now anticipating key US macroeconomic data this week, including preliminary fourth quarter GDP data and the Core PCE price index, for meaningful momentum.
Trading recommendation: Trade in a narrow channel 150.30-150.85
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