Fundamental Market Analysis for December 23, 2024 USDJPY
Doubts about the Bank of Japan's rate hike plan and widening yield differential between the US and Japan put pressure on the yen.
Traders are expecting a short-term boost from the US consumer confidence index, which will be released on Monday.
The Japanese yen (JPY) starts the new week on a softer note and remains a short distance from the five-month low reached on Friday against its U.S. counterpart. Doubts over when the Bank of Japan (BoJ) will raise interest rates again have proven to be a key factor weighing on the JPY. In addition, the recent widening of the yield differential between the US and Japan, backed by the Federal Reserve's (BoJ) tightening stance, is undermining the low-yielding JPY.
Added to this, the overall positive tone in equity markets is reducing demand for the safe-haven yen. Meanwhile, strong inflation data released in Japan on Friday left room for a potential BoJ rate hike in January or March. This, along with subdued US Dollar (USD) price action, did not help the USD/JPY pair to realize upside potential in the Asian session in the absence of any fundamental catalyst.
Trade recommendation: Watch the level of 156.00, when fixing below consider Sell positions, when rebounding consider Buy positions.
Traders are expecting a short-term boost from the US consumer confidence index, which will be released on Monday.
The Japanese yen (JPY) starts the new week on a softer note and remains a short distance from the five-month low reached on Friday against its U.S. counterpart. Doubts over when the Bank of Japan (BoJ) will raise interest rates again have proven to be a key factor weighing on the JPY. In addition, the recent widening of the yield differential between the US and Japan, backed by the Federal Reserve's (BoJ) tightening stance, is undermining the low-yielding JPY.
Added to this, the overall positive tone in equity markets is reducing demand for the safe-haven yen. Meanwhile, strong inflation data released in Japan on Friday left room for a potential BoJ rate hike in January or March. This, along with subdued US Dollar (USD) price action, did not help the USD/JPY pair to realize upside potential in the Asian session in the absence of any fundamental catalyst.
Trade recommendation: Watch the level of 156.00, when fixing below consider Sell positions, when rebounding consider Buy positions.
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