Market concerns are growing that the Bank of Japan may refrain from raising the interest rate at its meeting next week. Market expectations for a 25-basis point rate hike this month fell to just 23%, following reports that the central bank sees "little cost" in delaying further tightening. BOJ officials have indicated they want to see more evidence of wage growth before proceeding with additional policy adjustments. At the same time, some policymakers noted that the risk of a weak yen driving inflation higher was becoming less of a concern. Meanwhile, data showed a slight improvement in sentiment among large Japanese manufacturers for the fourth quarter, providing some support for the outlook on the domestic economy.
Comparing yen and US dollar trends, markets have already factored in a 25 basis point rate cut by the Fed next week, although the outlook for 2025 remains uncertain. Data released on Thursday showed that the producer price index rose more than expected, while the core index slowed in line with forecasts. In addition, initial jobless claims unexpectedly rose to a nearly two-month high of 242,000, while experts called for 220,000 applications. Markets are now pricing in a 96% chance that the Fed will cut rates by a quarter percentage point at next week's meeting. The dollar also received support after yesterday's rate cuts by the European Central Bank and Swiss National Bank.
From a technical point of view, USDJPY is going to test the resistance level at 153.60.
The final recommendation is to buy USDJPY.
The profit could be fixed at 153.60. The Stop loss could be placed at 152.10.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, doesn’t exceed 1% of your deposit.
This content is for informational purposes only and is not intended to be investing advice.
