USD/JPY – Market Analysis

Here’s the revised version with the specified wording removed:

– Gold declines while Silver, Palladium, Platinum, and other metals see gains.
– Bond yields have improved but remain well below Monday’s opening levels, reinforcing expectations of a rate cut in September.
– Rate cut predictions continue to support the stock market and Gold, with investors turning their attention to the FOMC Meeting Minutes for clearer indications.
– The US Dollar’s downward trend loses momentum after three days of strong declines.

USD/JPY Analysis

The USD/JPY pair is primarily driven by the US Dollar, which has fallen in value over the past week due to lower inflation and weaker employment data in July. These factors are contributing to market expectations of a rate cut in September, with experts considering it a near certainty. The key question now is whether the Federal Reserve will opt for a 25 or 75-basis point cut.

The Chicago exchange suggests a 70% probability of a 25-basis point cut and a 30% chance of a 50-basis point cut. By year-end, most believe the Fed will reduce rates by 0.75% to 1.00%. Larger and more frequent cuts are generally negative for the US Dollar, leading investors to increase exposure to the Yen as the Dollar loses its safe-haven and inflation-hedge status. The upcoming FOMC Meeting Minutes are crucial as investors look for further insights.

Investors are also focused on Fed Chair Jerome Powell’s upcoming speech at the Economic Symposium in Jackson Hole, where he is expected to confirm the agency’s plans to reduce the interest rate by 25 or 50 basis points at the September meeting.

Technical Analysis

The USD/JPY exchange rate is currently trading below the 75-Period EMA and 100-Period SMA, and remains under the neutral level on the RSI, indicating a potential downward trend in the medium term. Although the price has risen during the first two sessions today, a shift in direction is necessary to generate a sell signal. For instance, if the price drops below 145.630, the moving averages may form a bearish crossover, signaling further downward movement. Additionally, the Fibonacci analysis on the 2-Hour chart suggests that a sell signal could emerge if the price falls below 145.367.

Key factors to watch over the next 24 hours include the FOMC Meeting Minutes, Services PMI, Manufacturing PMI, and Friday’s Fed Speech at the Jackson Hole Symposium at 14:00 GMT. Although no significant news is expected from Japan, the Yen, despite a 0.40% decline today, has been regaining strength over the past two hours.