Fundamental Market Analysis for December 10, 2024 USDJPY
Doubts about the Bank of Japan's ability to keep raising rates proved to be a key factor undermining the yen.
The Japanese yen (JPY) lost ground against its U.S. counterpart for the second straight day on Tuesday and lifted the USD/JPY pair to a one-week high, above the mid 151.000s during Tuesday's Asian session. Uncertainty over how soon the Bank of Japan (BoJ) may raise interest rates again has JPY bulls on the defensive. In addition, the overnight rebound in US Treasury yields from October lows undermines the low-yielding Yen. Furthermore, the US Dollar's post-NFP rebound from near one-month lows, backed by expectations of a less accommodative stance from the Federal Reserve (Fed), acts as a tailwind for the currency pair.
That said, the softer tone of risk sentiment, concerns that US President-elect Donald Trump's tariff plans could trigger a second wave of global trade wars, and geopolitical tensions help limit deeper losses for the safe-haven yen. Traders may also refrain from aggressive bullish bets on the USD/JPY pair and prefer to wait for the release of the latest US consumer inflation data due on Wednesday. The all-important Consumer Price Index (CPI) report will be seen as a fresh signal that the Fed is going to cut rates. This, in turn, will stimulate demand for the dollar and provide meaningful momentum to the currency pair ahead of the central bank's key events next week.
Trading recommendation: Trade mainly with Buy orders from the current price level.
The Japanese yen (JPY) lost ground against its U.S. counterpart for the second straight day on Tuesday and lifted the USD/JPY pair to a one-week high, above the mid 151.000s during Tuesday's Asian session. Uncertainty over how soon the Bank of Japan (BoJ) may raise interest rates again has JPY bulls on the defensive. In addition, the overnight rebound in US Treasury yields from October lows undermines the low-yielding Yen. Furthermore, the US Dollar's post-NFP rebound from near one-month lows, backed by expectations of a less accommodative stance from the Federal Reserve (Fed), acts as a tailwind for the currency pair.
That said, the softer tone of risk sentiment, concerns that US President-elect Donald Trump's tariff plans could trigger a second wave of global trade wars, and geopolitical tensions help limit deeper losses for the safe-haven yen. Traders may also refrain from aggressive bullish bets on the USD/JPY pair and prefer to wait for the release of the latest US consumer inflation data due on Wednesday. The all-important Consumer Price Index (CPI) report will be seen as a fresh signal that the Fed is going to cut rates. This, in turn, will stimulate demand for the dollar and provide meaningful momentum to the currency pair ahead of the central bank's key events next week.
Trading recommendation: Trade mainly with Buy orders from the current price level.
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