Selling pressure on the Japanese yen persists amid heightened political and trade uncertainty in the country. The lack of hawkish signals from BOJ Deputy Governor Ryozo Himino encourages investors to take short positions on the currency. Although Himino said the central bank should keep hiking interest rates, he also warned that the global economic outlook remains pretty unstable. This suggests the regulator is not in a hurry to raise its low borrowing costs, which puts downward pressure on the yen. Meanwhile, the American dollar has recently gained strength, propelling the USDJPY pair to a month high of 149.00.
Hopes for a BOJ rate hike before year-end are supported by the expectation that Japan's tight labor market could boost wages and inflation. Conversely, traders are pricing in a roughly 90% probability that the Federal Reserve will cut rates by 25 basis points at its September 17 meeting. This anticipated Fed easing diverges significantly from the BOJ's stance and is likely to weaken the aforementioned currency pair.
The overall recommendation is to sell USDJPY. Take profit: 140.00. Stop loss: 152.00.
The volume of your open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
