USDJPY Under Pressure
USDJPY has broken down to fresh lows for the year ahead of the upcoming US inflation reading later today. The greenback has come under pressure on the back of last night’s presidential elections debate which post-debate polls have generally awarded to Harris. A well-cited CNBC poll gave Harris the win at 63%. Given that a Trump win is generally seen as being more Dollar-positive, the better odds of a Harris win are keeping USD muted currently.
Strong Yen Impact
Weakness in the US Dollar comes at a time when the Japanese Yen remains firm through continued BOJ tightening. After the joint action taken at the end of July, the BOJ has reaffirmed its commitment to continued tightening. Speaking today, BOJ’s Nakagawa reiterated the view that the bank stands willing to adjust policy levels as needed in light of the risks from wage-growth and import-inflation.
BOJ vs Fed
The BOJ’s hawkish stance is strongly juxtaposed with current Fed easing expectations. As such, today’s US CPI data could easily spark a fresh leg lower in the pair if we see CPI fall again, as expected. The market is looking for annualised inflation last month to print 2.6% from 2.9% prior. Indeed, if data undershoots forecasts, this would increase expectations of a deeper cut from the Fed this month, leading USD firmly lower near-term.
Technical Views
USDJPY
The sell off in USDJPY this week has seen the pair break below the prior 2024 lows with price now testing support at the 140.50 level. If price breaks below here, focus shifts to 137.36 next, in line with bearish momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.