Yen Rose As Dollar Rally Halts

Fundamental Analysis

* Greenback Pause: The USD/JPY has faced selling pressure as the U.S. dollar retreated following a period of significant gains. On the Japanese side, the National Core Consumer Price Index (CPI), which excludes volatile food and energy prices, climbed to 2.1% in September, up from 2% in August. Rising inflation has reinforced expectations that the Bank of Japan (BoJ) may raise interest rates further this year. However, the outlook for the U.S. dollar remains strong, with investors anticipating that the Federal Reserve (Fed) will take a moderate approach to cutting interest rates. Traders have ruled out the possibility of a large Fed rate cut in November, as a series of positive U.S. economic data highlights continued resilience. The CME FedWatch tool indicates that 30-day Federal Funds futures are pricing in a total of 50 basis points (bps) of rate cuts by year-end, suggesting 25 bps reductions in both November and December.

Technical Analysis

* Technical Breakout: USDJPY was traded lower following prior breakout below the previous support level 149.550. MACD which illustrate ongoing bearish momentum signal suggest the pair to likely further extend its losses.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 146.950. Conversely, a potential reversal is also to be expected and the price could head back towards 152.550 after its breach back above the level 149.550.

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Potential Risks

Looking ahead, investors will shift their focus to crucial U.S. data this week, including Manufacturing PMI, Services PMI, and Durable Goods Orders, while Japan faces a lack of significant data releases

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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.