USD/JPY Ready for a Downturn After BOJ?

10 Eki 2023

The USD/JPY exchange rate experienced a rebound, trading higher around 149.00 during the European session due to a positive risk sentiment amidst the Middle-East conflict. The Japanese Yen did not respond to the Bank of Japan's consideration of revising core inflation estimates upward. Federal Reserve's remarks led investors to downplay the possibility of further rate hikes. The recovery of the US Dollar contributed to the rebound. The ongoing Middle-East conflict shifted investors towards the US Dollar, putting pressure on the safe-haven Japanese Yen. The conflict escalated when Hamas initiated an attack on Israel, prompting a decisive response. The Bank of Japan is considering an upward revision of the core Consumer Price Index estimate for the fiscal year 2023/24. Japan's non-seasonally adjusted Current Account for August fell below forecasts. The Japanese economic calendar for the week only includes low-impact data. Japan will lead a G7 meeting to discuss the war in Ukraine and the global economy. The US Dollar Index is around 106.00, despite strong US Nonfarm Payroll data and a decline in US Treasury yields. Federal Reserve officials' remarks indicated a cautious approach to rate hikes, influencing the depreciation of the US Dollar. Investors are focused on upcoming inflation figures and the FOMC meeting minutes later in the week. Additionally, there is a strong bearish trendline after the break of a bullish trendline at the 150 level that is supporting the sharp decline. I am considering a possible short with liquidity take profit down to the 147.30 level. Let me know what you think. Regards from Nicola, CEO of Forex48 Trading Academy.