Dollar Dip Continues
USDJPY has broken down to fresh monthly lows today as dovish Fed expectations continue to pressure the Dollar. Weaker-than-forecast US CPI earlier in the week has seen market pricing for a September cut surging to more than 95%. Coming hot on the heels of the NFP shock we saw at the start of the month, the data has reinforced the view that the Fed will ease next month with pricing also reflecting a growing view that a follow up cut will be seen ahead of year end.
Dovish Fed/Hawkish BOJ Views
This week, US Treasury Secretary Scott Bessent urged the Fed to cut rates rapidly in a bid to bolster the ailing US economy. Bessent went on to say that the BOJ, in contrast, should be hiking rates further. This divergent view is clearly reflected today in the price action we’re seeing with JPY rallying sharply as USD continues to slide.
US Data on Watch
Looking ahead, traders will be watching incoming US data over the remainder of the week. PPI today and retail sales and UoM data tomorrow will all be closely watched. Any fresh weakness is likely to further feed into bearish USD sentiment, strengthening traders’ Fed easing expectations and keeping USD skewed lower into next week. JPY also has room to run further to the upside given the lingering uncertainty around Trump-Putin peace talks tomorrow and the broader situation between Russia and Ukraine, fuelling fresh safe-haven buying of JPY.
Technical Views
USDJPY
The sell of fin USDJPY has seen price breaking down below the bull channel lows with the market now testing below the 144.32 level also. With momentum studies bearish, a break lower here opens the way for a deeper run towards 144.32 next. Bulls nee to get back above 149.30 to alleviate near-term downside risks.
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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.