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  • Investors have continued to factor in Fed rate cuts by the end of this year.
  • Kazuo Ueda commented on the need to continue monetary easing.
  • Ueda expects Japan’s inflation will peak shortly.

Today’s USD/JPY price analysis is bearish as the dollar falls on increased rate-cut bets. The Fed will likely raise interest rates at its policy meeting next week. Still, investors have continued to factor in interest rate cuts by the end of 2023.

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According to Joe Manimbo, senior market analyst at Convera in Washington, the dollar cannot build on last week’s gain. Upcoming data could show slower growth in the US and lower inflation. Such scenarios would cement the case for a mid-year rate pause.

The BoJ governor, Kazuo Ueda, commented on the need to continue monetary easing. This comes before a carefully anticipated Bank of Japan meeting on Friday.

Since taking over from Haruhiko Kuroda at the beginning of this month, Ueda has reassured investors that any policy change won’t occur rapidly. Therefore, it is assumed that he will preserve the BOJ’s existing ultra-easy yield curve control (YCC) strategy.

According to Reuters, the BOJ will leave the YCC unchanged at its meeting next week as it waits for more proof of persistent wage increases.

Kazuo Ueda stated on Monday that the central bank’s inflation outlook must be “quite strong and close to 2%” to contemplate changing yield curve control.

Businesses are passing on growing import costs to consumers more than anticipated. He, however, predicted that Japan’s inflation would peak shortly and then decelerate to below the BOJ’s target of 2% in March 2024.

USD/JPY key events today

Data from the US will likely cause a lot of volatility later in the day. Investors will receive important data on the housing market and consumer confidence.

USD/JPY technical price analysis: Bears challenge the trendline support

USD/JPY technical price analysis
USD/JPY technical price analysis chart

USD/JPY bears are facing trendline support in the 4-hour chart. The price has respected this support thrice before and might do so again. The bullish bias is strong as the price has not yet broken the higher highs and higher lows pattern.

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The price is trading slightly below the SMA, showing bears are currently stronger. The bullish bias will shift if bears close below the trendline and the 133.50 support level. A break below 133.50 would make a lower low.

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