Yen Gains On Positive Data, BoJ Rate Hike Speculation

Fundamental Analysis

* Data-driven: The Japanese Yen continues to strengthen against the U.S. dollar, supported by recent positive data from Japan. In July, Japan’s Labor Cash Earnings increased by 3.6% year-on-year, a slowdown from June’s 4.5% rise where it was the highest since January 1997, but still exceeding market expectations of 3.1%. This robust performance has fueled speculation that the Bank of Japan (BoJ) might raise interest rates again before the end of 2024. Additionally, Jibun Bank’s Services PMI for August was revised to 53.7 from an initial estimate of 54.0, marking the seventh straight month of expansion in the service sector, although the figure remains steady from July.

Technical Analysis

* Technical Breakout: USDJPY was traded lower while currently testing the support level 143.10. MACD which illustrate diminishing bullish momentum signal suggest the pair to likely extend its losses after it breaks below the level.

*Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 141.70 after it breached below the level 143.10. Conversely, a potential rebound is also to be expected and the price could head back towards 144.650.

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

Potential Risks

Moving ahead, traders will also focus on upcoming economic data such as the Nonfarm Payrolls (NFP) and Unemployment Rate to shed light on the potential size of an expected rate cut by the Fed this month.

Know how to manage trading risks with risk management strategies.

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.