Japanese Yen Soars Following Hawkish BoJ

Fundamental Analysis

* Yen Frenzy: The Japanese Yen (JPY) continues to strengthen against the dollar, driven by expectations that the Bank of Japan (BoJ) will raise interest rates at next week’s policy meeting. Toshimitsu Motegi, a senior official in the ruling party, has urged the BoJ to more transparently communicate its plans to normalize monetary policy through gradual interest rate hikes, according to Reuters. Additionally, Prime Minister Fumio Kishida has stated that normalizing the central bank’s monetary policy would facilitate Japan’s shift towards a growth-driven economy. On the other hand, the dollar is facing challenges due to increased speculation of a Fed rate cut in September. According to CME Group’s FedWatch Tool, markets now show a 93.6% probability of a 25-basis point rate cut at the September Fed meeting, up from 88.5% the previous day.

Technical Analysis

* Technical Breakout: USDJPY was traded lower following prior breakout below the previous support level 153.450. MACD which illustrate diminishing bullish momentum signal suggest the pair likely to extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 151.950. Conversely, a potential reversal is also to be expected and the price could head towards 155.250 after it breach back above the level 153.450.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will focus on the upcoming U.S. GDP report for the second quarter as a key catalyst. Additionally, other data such as U.S. durable goods orders and initial jobless claims will also be closely monitored.

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Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.