USD/JPY Price Action: Key Factors This Week
In recent days, the USD/JPY pair has experienced a decline, primarily driven by expectations of an upcoming rate cut from the U.S. Federal Reserve. The U.S. dollar weakened, while the Japanese yen gained strength. As the market anticipates a potential 50 basis point cut, traders are preparing for a major shift in the currency pair. Meanwhile, the Bank of Japan (BOJ) remains a key player, with several policymakers signaling the possibility of further rate hikes for USD/JPY weekly forecast.
With the FOMC meeting scheduled next week, along with key retail sales data from the U.S., there is potential for further volatility in the market. Investors are particularly interested in whether the Fed will opt for a 25 or 50 basis point cut. While a smaller rate cut might offer short-term support for the dollar, a larger reduction could result in further losses for the greenback.
On the technical front, the USD/JPY pair broke below the 144.00 support level and dipped close to 140.07, signaling increased bearish pressure. However, there has been a noticeable bullish divergence, which may indicate a potential reversal if the market fails to breach the 140.07 support level.
Focus on BOJ’s Hawkish Stance
At the same time, the Bank of Japan is expected to maintain its rates for now. However, economists are pricing in a rate hike by the end of the year, which could further influence the USD/JPY pair. As traders wait for both central banks’ decisions, the USD/JPY remains in focus due to the potential for substantial market shifts.
Technically, if the USD/JPY breaches its 22-SMA level, it could signal a change in sentiment. A successful break could lead to further gains, pushing the pair toward the 144.00 mark. On the contrary, if the 22-SMA holds firm, the bearish trend could continue.
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