- If Powell indicates a more hawkish stance, it could trigger another significant yen selloff.
- Experts have criticized the BOJ’s loose monetary policies for raising import costs.
- Money markets predict the Fed will maintain rates within the 5.25%-5.5% range.
Today’s USD/JPY forecast is bearish as investors take profits before the Jackson Hole Symposium. The Japanese authorities are concerned about this week’s Jackson Hole symposium. They fear that if US central bankers indicate a more hawkish stance, it could trigger another significant sell-off in the yen. Consequently, this would compel Tokyo to intervene to support the currency.
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Initially, investors had anticipated Powell to consider ending interest rate hikes due to signs of inflation moderation.
However, the current concern for Japanese officials is that Powell might convey the opposite direction due to persistent price pressures. This could result in a repeat of last year’s scenario when the yen sharply depreciated against the dollar.
Though the yen’s trajectory is closely linked to the dollar’s movement, the currency’s weakness has become a political issue. It has caused issues for Prime Minister Fumio Kishida and the Bank of Japan. Moreover, experts have criticized the BOJ’s loose monetary policies for raising import costs.
Meanwhile, money markets predict that the Fed will maintain rates within the 5.25%-5.5% range until the second quarter of the following year before considering easing. Yet, investors will closely scrutinize Powell’s speech on Friday for hints about potential additional rate hikes.
USD/JPY key events today
Investors are expecting the S&P Global US services PMI report from August. Additionally, they will watch housing data, including the building permits and new home sales reports.
USD/JPY technical forecast: Bears are in the lead within the consolidation.
On the charts, USD/JPY is bearish, but the price has entered a period of consolidation. This comes after bulls failed to go beyond the 146.51 resistance level. The price has now found a range area with support at 145.00 and resistance at 146.51.
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At the moment, bears are in the lead within the range as the price sits below the 30-SMA. Moreover, the RSI trades under the pivotal 50-level. Therefore, the price will likely soon drop to 145.00. A break below this level would start a bearish trend, with the next target at 144.01.
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