Should Traders Buy the Dip That Depends on Policymakers
A strong response from global policymakers may be the sign traders need to see for equity markets to form a bottom...
Share this:
US Dollar Outlook: USD/JPY
USD/JPY appears to be stuck in a defined range even as US JOLTS Job Openings climbs to 8.04M in August from 7.71M the month prior, but the ongoing shift in the carry trade may continue to influence the exchange rate as the Federal Reserve plans to further unwind its restrictive policy.
USD/JPY Outlook Mired by Negative Slope in 50-Day SMA
USD/JPY holds below the 50-Day SMA (145.69) following the failed attempt to test the September high (147.21), and it remains to be seen if the exchange rate will track the negative slope in the moving average as Fed Chairman Jerome Powell acknowledges that ‘if the economy evolves broadly as expected, policy will move over time toward a more neutral stance.’
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
Nevertheless, Chairman Powell insists that ‘we are not on any preset course’ while speaking at the National Association for Business Economics, with the official going onto say that ‘this is not a committee that feels like it’s in a hurry to cut rates quickly.’
With that said, USD/JPY may face range bound conditions as recent remarks from Chairman Powell curb speculation for another 50bp rate cut, but swings in the carry trade may continue to impact the exchange rate as major central banks implement lower interest rates.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Strategist; USD/JPY on TradingView
- Keep in mind, the recent recovery in USD/JPY emerged following the failed attempts to close below the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone, and the exchange rate may further retrace the decline from the September high (147.21) as it extends the advance from the start of the week.
- However, lack of momentum to close above the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region may keep USD/JPY within the September range, and the exchange rate may track sideways if it largely ignores the negative slope in the 50-Day SMA (145.69).
- Meanwhile, a close below the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone may push USD/JPY towards the July 2023 low (137.24), with the next region of interest coming in around 134.70 (78.6% Fibonacci retracement) to 136.00 (23.6% Fibonacci extension).
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold Update: XAU/USD Remains Under Pressure Even After the NFP Report
As the trading week comes to an end, weakness around gold price action remains evident in the short term. This can be seen in the performance of the past two sessions, where the metal has declined by approximately 0.3%. Although the move has not been particularly aggressive, it highlights that buying pressure continues to struggle to regain control of the market.
Dow Jones Slide Shows What Rate Hike Bets Mean for Stocks
The Dow Jones support breakdown shows rising bond yields and rate hike bets hitting U.S. stocks while tech giants prop up the Nasdaq.
NFP Preview: Can the Jobs Report Overcome the Bond Market Meltdown Too?
Traders and economists expect the NFP report to show that the US created 90K net new jobs, with average hourly earnings rising 0.3% m/m (3.1% y/y) and the U3 unemployment rate at 4.1% - see what the leading indicators are suggesting!
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.