USDJPY Sheds Volatility Into Weekend

USDJPY could be the most active pair into the end of the week with a Bank of Japan interest rate decision and the US payroll data.

USDJPY – Daily Chart

USDJPY has found resistance at the 137.28 level, and that could provide a short opportunity for traders.

It is also a vital sign for Japanese yen gains after the US Federal Reserve Chair rocked stocks and commodities with hawkish testimony to Congress over the last two days.

Hawkish tone set by The Fed

Jerome Powell warned on Tuesday that the central bank is prepared to raise interest rates more aggressively to temper the economy and halt stubborn inflation. 

“As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” he told the Senate banking committee. 

“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” he added. 

The Federal Reserve has raised interest rates eight times since March 2022, and the central bank had expected those hikes to do more to bring inflation back down. The US spread of 2 and 10-year yields had now inverted the most since 1981, when the last aggressive rate hike strategy was used. According to Ken Griffin, the CEO of hedge fund giant Citadel, a recession could be the outcome. 

“We have the setup for a recession unfolding” as the Fed responds to inflation, Griffin said. 

Longer-dated treasuries are lagging behind the two-year benchmark due to the expectation of higher rates in the short term. That inversion has a strong track record of predicting recessions, which generally last. In general, such inversions preceded economic downturns by 12 to 18 months.

Attention will now turn to the latest Non-Farm Payrolls US jobs number on Friday, which could intensify the rate debate. 

However, traders will first have a Bank of Japan interest rate hike to look at ahead of Friday’s session. Interestingly, the USDJPY is finding resistance, which could hint at the end of the yield-targeting program or a more hawkish tone.

Recent News
Start Trading Now !

Try our demo account for free to learn trading. When you’re ready, switch to a live account and start trading for real.

Popular posts

ATFX

The Firm has taken the decision to cease providing services to retail clients, with immediate effect. We are therefore unable to accept any applications.

Services to professional clients will not be impacted. For professional applications please contact [email protected]

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/ar/ to proceed.
ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://atfxgm.eu/en/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en-au/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/ar/ to proceed.
ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en-za/ to proceed.
ATFX

Restrictions on Use

Products and Services on this website are not suitable for Hong Kong residents. Such information and materials should not be regarded as or constitute a distribution, an offer, solicitation to buy or sell any investments.

使用限制: 本網站的產品及服務不適合香港居民使用。網站內部的信息和素材不應被視為分銷,要約,買入或賣出任何投資產品。

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://atfxgm.eu/en/ to proceed.

ATFX

Restrictions on Use

AT Global Markets (UK) Limited does not offer trading services to retail clients.
If you are a professional client, please visit https://atfxconnect.com