As we kick off October 2024, the USD/JPY forecast indicates potential fluctuations. While the USD/JPY has pared some losses to start the new week, the broader downward trend may persist. The Asian session opened with the Nikkei up 1.31%, ASX down 0.50%, and NZX down 0.13%. Weak seasonality did not hinder September’s strong bullish views. Wall Street recorded its fifth straight month of gains, while the MSCI Asia ex-Japan reached its highest level in over two years.
Market Updates
Mainland China’s markets are closed until 7 October, while Hong Kong and South Korea are also offline today. Chinese equities have thrived following a series of stimulus measures. Markets might temporarily overlook weak economic data, hoping recent support signals policy success in the months ahead.
Japan’s Economic Climate: Impacts on USD/JPY
Japanese equities, however, are showing uncertainty. Investors anticipate a hawkish stance from the incoming prime minister, Mr. Shigeru Ishiba. This led to initial yen strengthening and a negative reaction in Japanese stocks.
US Economic Data in Focus: Implications for USD/JPY
A series of US economic data will be crucial this week. Fed Chair Jerome Powell maintained his view of two quarter-point rate cuts by the year’s end, urging market expectations to align accordingly.
While the USD/JPY has regained some strength due to Powell’s remarks, the forecast suggests a continuation of the downward trend. US policymakers remain committed to smaller 25 basis point (bp) adjustments over the next meetings.
On the Japanese side, Mr. Ishiba’s call for a snap election on 27 October raises expectations for quicker policy adjustments, reinforcing a hawkish outlook.
Technical Analysis of USD/JPY: Key Levels to Watch
The 146.26 level may offer a resistance confluence, marking a key horizontal support-turned-resistance level. This was evident during the initial sell-off reaction to the surprise outcome of Japan’s new prime minister. If the trend of lower highs continues, taking a short position around this level may be attractive.
Overall, trading in line with the broader downward trend could lead to a breakdown of the 140.53 level on watch.
Stay informed with the latest Forex trading news and analysis. Visit our website now at: https://fixiomarkets.com/en/prex-blogs
