USD/JPY Supported on Fed Path Uncertainty Ahead of the NFPs


USD/JPY Analysis

The US Fed had made a dovish shift last month, as it hinted to peak rates and signaled at least three cuts in the current year [1]. Wednesday's accounts of that decision reaffirmed that "almost all participants" see lower rates ahead. However, they noted "an unusually elevated degree of uncertainty" [2], which kept prospects of further tightening on the table, casting some doubt over the policy path.

USD/JPY started the new year on the front foot and the Fed minutes are supportive, not long after the its Japanese counterpart had maintained its ultra-loose stance. The pair tries to take out the critical 114.70 region where the EMA2000 and the 38.2% Fibonacci of the las leg down converge. Successful effort would bring 149.15 in the spotlight, but we are cautious around the ascending prospects.

The Fed has touted the need for a restrictive stance and has not taken more tightening in play, but its projections point to a pivot and lower rates this year, even if swallower than market pricing. The Bank of Japan may have maintained its accommodative setting, but is moving towards normalization. This shift in policy dynamics has led the pair to tow straight losing months. Below the aforementioned crucial resistance, USD/JPY is in risk of fresh lows (140.24). The next leg of the move will likely be determined by Friday's US Jobs report.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 03 Jan 2024


Retrieved 16 Apr 2024

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