Hawkish policy stance maintained by Fed and Dovish policy by BOJ has led to yield gap widening & making carry trades attractive for this pair. Modest cuts priced in by Fed will not take away this yield differential and USD would continue bullish run until US elections. Pair could test 165 mark based on the technical indicator
USD JPY seems to be creating an upward sloping symmetrical triangle with Craddle forming at 170 level somewhere close to US election time.
Short term view - pair will breach 160 level and trade in ranges between 160-165. Subject to BOJ tone next week.
Medium term view - FOMC rate cut & expected BOJ rate hike could negate the USD strength, however the...
Key Pivot to reach Apex which would result in Breakout is around US Election period.(Nov start)
1) Election Outcome favourable and CPI under control (fed cuts) - Yields drop further
2) Election outcome not favourable & CPI under Control - Yields to move up in medium term (above 4.467% level) & throwback to apex.
3) Election outcome favorable & CPI increases -...
Next Breakout in July around FOMC Meeting, if Fed cuts then yields expected to fall and breakout below 4.7% support level. Long USD Bonds would be preferred direction.
USD Strength on back of weak global growth has been the story so far, with upcoming CPI in the line of sight, getting the conviction on rate cuts will be firmed up. This could have an impact on USD Strength. Alongside this Local growth in China is showing positive signs which could be partially offset by some Trade tariff impact. However my view is Ascending...
