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Tuesday, March 5, 2024

USD/JPY – current situation on the Forex market

Inflation in the US slowed more than forecast. It was such a steep turn that the dollar didn’t manage and was swept sharply southward. The USD/JPY pair suffered the most losses.

A funeral march played for the dollar

This year, like many other economies around the world, the U.S. faced record-high inflation. However, unlike most countries, the U.S. did not cower at the problem and moved to aggressive actions almost immediately.

  • Since March, the Fed has already raised interest rates five times by 75 bps. By the end of the year, such an abrupt approach finally brought the long-awaited result: yesterday’s statistics on inflation in the U.S. caused politicians to be relieved.
  • In October, annual consumer price growth fell below 8% for the first time in 8 months. It fell from 8.2% to its lowest level since March 2021 of 7.7%, less than the 0.3% estimate.
  • Core CPI also showed a slowdown, although economists had expected the figure to remain in roughly the same range. It declined to 6.3% from the previous value of 6.6%.
  • Softer inflation triggered another wave of speculation about a possible slowdown in the rate of interest rate hikes in the US. This has hurt yields on 10-year U.S. government bonds.

To trade profitable, you need to catch a big trend and wait patiently. Choosing one of the best 7 forex brokers in the USA is not enough. It is hard to see +3%, +10%, +30% of profit, but you have to wait further until there are no clear signs of a reversal and end of trend. Each trader should have his own rules of exit and profit taking.

The end of the bearish trend in the yen?

The main lifeline for the Japanese currency right now is the hope that the Fed will start to slow the pace of its monetary tightening. The interest rate differential between U.S. and Japanese interest rates would then not rise as sharply as before.

The U.S. inflation report has encouraged the JPY bulls. But they were even more inspired by the comments of the Fed members. After the data release the President of the Federal Reserve Bank of Dallas, Laurie Logan, said that the latest decline in inflation is a pretty strong argument for the Fed to start slowing down.

From a fundamental analysis point of view, the short-term outlook for the dollar-yen pair does not look so gloomy. Japan’s GDP data for the third quarter will be released on Tuesday, 11/15. According to the forecasts, the index will drop to 1.1% year-on-year compared to the previous value of 3.5%.

Such a significant slowdown in economic growth could reinforce the dovish rhetoric of the Japanese central bank, which would help the dollar recover slightly in tandem with the yen.

John Oliver
John Oliver
Uneeb Khan CEO at blogili.com. Have 4 years of experience in the websites field. Uneeb Khan is the premier and most trustworthy informer for technology, telecom, business, auto news, games review in World.

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