Japanese Yen Extend Losses Amid BoJ Rate Hike Ambiguity

Fundamental Analysis

* Rate Hike Skepticism: The Japanese Yen struggles to find buyers against the U.S. Dollar as investors remain doubtful about the Bank of Japan’s (BoJ) plans for a rate hike. Minutes from the BoJ meeting, released on Tuesday, highlighted the potential for gradual rate increases if inflation trends align with expectations, possibly reaching 1.0% by the end of fiscal 2025. The minutes also stressed a cautious approach to monetary policy, focusing on wage-driven economic growth amid domestic and global uncertainties, alongside fiscal measures to combat deflationary pressures. BoJ Governor Kazuo Ueda stated last week that the central bank would prefer to wait for data confirming sustained wage growth next year and to gain clarity on global economic policies. Market sentiment suggests that the BoJ is unlikely to raise interest rates at its January meeting, with March being seen as a more probable timeframe, further weakening the Japanese Yen.

Technical Analysis

* Technical Breakout: USDJPY was traded higher while currently testing the resistance level 157.650. MACD which illustrate diminishing bearish momentum signal suggest the pair to likely extend its gains after it breaks above the level.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 159.450 after it breach above the level 157.650. Conversely, a potential reversal is also to be expected and the price could head back towards 155.750.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

As the holiday season begins and the economic calendar remains relatively light, market sentiment is expected to be the primary driver of market activity. However, upcoming U.S. data releases such as Initial Jobless Claims, may still generate some market movement.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.