USDJPY Hits Two-Month Highs
Dollar Rallying Midweek
USDJPY is threatening to break out above the 159 level which has capped the market over the last two months. The move comes amidst a fresh push higher in USD following hotter-than-forecast inflation data yesterday and a slew of hawkish Fed commentary. In particular, comments from Fed’s Waller who voiced his support for a larger .5% Fed hike in December have seemingly reignited USD demand with market pricing for a hike in December now around the 90% level. We also heard Fed’s Logan voicing her support for two further Fed rate hikes, echoing the results of the dot plot forecasts we saw which showed that 4 members were in favour of two further Fed hikes this year.
Bullish Risks
On the back of last week’s bumper US jobs data, yesterday’s CPI beat and hawkish Fed comments we’ve heard, traders will now likely be suspecting a stronger base of support for more aggressive tightening from the Fed. As such, USDJPY looks vulnerable to a fresh push higher here as focus remains on USD. Any incoming hawkish signals from the BOJ might dent the rally here and there, but ultimately the hawkish Fed picture should remain the dominant market theme in FX through year end keeping USDJPY risks pointed to the upside.
Technical Views
USDJPY
The pair is now testing above the 159.01 level following the rally off the 157.95 level. With momentum studies bullish, a breach higher here turns focus to the 160 level next is the rally is sustained.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.