Market Analysis

USD/JPY Lingers at 152.50 as Markets Prepare for BoJ Rate Hike and Fed Guidance

Dupoin · 31 Jul16.1K Views

USDJPY

Prediction: Decrease

Fundamental Analysis:

The USD/JPY pair hovers around 152.50, staying above its recent three-month low as traders await the pivotal Bank of Japan (BoJ) policy decision. Markets are increasingly factoring in a higher likelihood of a rate hike, which is strengthening the Japanese Yen (JPY) and posing a challenge for the currency pair.

Looking ahead, all eyes are on the BoJ meeting, where policymakers are anticipated to raise rates by 10 basis points and outline plans to taper bond-buying operations, thereby enhancing the Yen's attractiveness. Concurrently, a modest rebound in the US Dollar has momentarily stalled the pair's upward momentum. The US Dollar Index edges higher towards 104.50 as investors adopt a cautious approach ahead of the Federal Reserve's policy meeting. Here, officials are expected to hold rates steady while maintaining dovish interest rate guidance.

Technical Analysis:

The USD/JPY pair is trading within a narrow range, maintaining its position above the critical support level of 156.00 during Monday's European session. Market participants are closely watching the forthcoming interest rate decisions by both the Bank of Japan (BoJ) and the Federal Reserve (Fed), set for Wednesday.

Expectations are that the BoJ will increase interest rates, potentially bolstering the Japanese Yen and creating a bearish environment for the USD/JPY pair. Conversely, the Fed is projected to keep rates unchanged but will provide crucial guidance on future monetary policy, which will be carefully scrutinized by the markets. As a result, traders are adopting a cautious approach, awaiting the outcomes of these significant central bank meetings before committing to major moves in the USD/JPY pair.

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