18 April 2024, USD/JPY
Event to pay attention to today:
17:00 GMT+3. USD - Existing Home Sales
USDJPY:
The USD/JPY pair extended its losses for the second consecutive session, trading around 154.30 in Asian hours on Thursday. The decline in the US dollar (USD) is exerting downward pressure on the USD/JPY pair. The Japanese Yen (JPY) may have been supported by the change in Japan's trade balance to a surplus in March.
Japan's overall trade balance improved to JPY 366.5bn from the previous deficit of JPY 377.8bn. Additionally, the Japanese yen may have strengthened due to safe-haven inflows, likely driven by risk aversion amidst heightened geopolitical tensions in the Middle East.
Conversely, expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period, supported by a strong US economy and steady inflation, serve as a counterbalance to the downward pressure on the USD/JPY pair.
On Wednesday, Federal Reserve Bank of Cleveland President Loretta Mester noted that inflation is outperforming expectations and that the Fed needs additional assurances before reaffirming the sustainability of 2% inflation. Furthermore, Ms. Mester noted that monetary policy is well-positioned and could be reduced if labour market conditions deteriorate.
Additionally, Ms. Bowman, the Chair of the Federal Reserve (Fed), stated that the rate of inflation is slowing and may stop in the long run. Ms. Bowman also noted that monetary policy is currently restrictive, and time will determine whether it is adequate or not.
Trading recommendation: We trade in the channel 154.00-154.60 on bounces from the levels
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