Regarding the recent trend of USD/JPY
2024-09-19
■ On the 17th, the US dollar/Japanese yen rose, but the rebound of the US dollar index was limited
■ It is expected that the US dollar/Japanese yen will once again fall below 140 yen, heading towards a depreciation of the US dollar
At the Federal Open Market Committee (FOMC) meeting held on the 17th and 18th, the market generally expects a rate cut. Market speculation surrounding the magnitude of the Federal Reserve's (FRB) interest rate cut has driven up the US dollar/Japanese yen, with the closing price of the US dollar/Japanese yen rising 1.8% from the previous day on the 17th. However, the US dollar index (DXY), which shows the strength of the US dollar against major currencies, only rose by 0.1%, with limited rebound strength, staying at a low level of 100.89.
On the 16th, the US dollar/Japanese yen hit a low of 139.56 yen. Whether there are signs of bottoming out will depend on the magnitude of the FOMC interest rate cut, the synchronized release of the Economic Outlook Summary (SEP), and the content of Federal Reserve Chairman Powell's press conference. If the interest rate cut is 0.25%, the US dollar may strengthen; If the interest rate cut is 0.50%, the trend of US dollar depreciation will accelerate. The market's focus is gradually shifting towards the Federal Reserve's rate cuts this year and next year. According to the target federal funds rate calculated by the Chicago Mercantile Exchange (CME) Group through the movement of federal funds rate futures, it is expected that the current 5.5% rate will drop to 4.25% by the end of 2024 and 3.00% by July September 2025. However, the interest rate forecast charts (dot plots) of the Federal Reserve's FOMC members at the June meeting showed 5.25% and 4.50%, respectively, significantly higher than market expectations. The magnitude of the dot matrix correction and the summary of the economic outlook at this meeting will also receive market attention.
Even if the Bank of Japan's interest rate hike is slow, the narrowing of the US Japan interest rate differential will make it difficult for the US dollar to find a rebound opportunity. If the US dollar/Japanese yen can clearly break through the high of 142.47 yen on the 17th, the upward target level may gradually be limited to the 38.2% decline since July, the retracement level of 148.13 yen, and the 50-day moving average of 148.54 yen. However, it is expected that the US dollar/Japanese yen will once again fall below 140 yen.
■ It is expected that the US dollar/Japanese yen will once again fall below 140 yen, heading towards a depreciation of the US dollar
At the Federal Open Market Committee (FOMC) meeting held on the 17th and 18th, the market generally expects a rate cut. Market speculation surrounding the magnitude of the Federal Reserve's (FRB) interest rate cut has driven up the US dollar/Japanese yen, with the closing price of the US dollar/Japanese yen rising 1.8% from the previous day on the 17th. However, the US dollar index (DXY), which shows the strength of the US dollar against major currencies, only rose by 0.1%, with limited rebound strength, staying at a low level of 100.89.
On the 16th, the US dollar/Japanese yen hit a low of 139.56 yen. Whether there are signs of bottoming out will depend on the magnitude of the FOMC interest rate cut, the synchronized release of the Economic Outlook Summary (SEP), and the content of Federal Reserve Chairman Powell's press conference. If the interest rate cut is 0.25%, the US dollar may strengthen; If the interest rate cut is 0.50%, the trend of US dollar depreciation will accelerate. The market's focus is gradually shifting towards the Federal Reserve's rate cuts this year and next year. According to the target federal funds rate calculated by the Chicago Mercantile Exchange (CME) Group through the movement of federal funds rate futures, it is expected that the current 5.5% rate will drop to 4.25% by the end of 2024 and 3.00% by July September 2025. However, the interest rate forecast charts (dot plots) of the Federal Reserve's FOMC members at the June meeting showed 5.25% and 4.50%, respectively, significantly higher than market expectations. The magnitude of the dot matrix correction and the summary of the economic outlook at this meeting will also receive market attention.
Even if the Bank of Japan's interest rate hike is slow, the narrowing of the US Japan interest rate differential will make it difficult for the US dollar to find a rebound opportunity. If the US dollar/Japanese yen can clearly break through the high of 142.47 yen on the 17th, the upward target level may gradually be limited to the 38.2% decline since July, the retracement level of 148.13 yen, and the 50-day moving average of 148.54 yen. However, it is expected that the US dollar/Japanese yen will once again fall below 140 yen.