- USD/JPY is creeping higher in the Tokyo ahead of US data, Brexit and awaits trade headlines.
- The pair is technically neutral-to-bearish according to the 4 hours chart.
USD/JPY is creeping higher in the Tokyo opening hour with its sights on a test of the 38.2% Fibo of the late July drop to recent swing lows through 106.30.
The pair is struggling for direction though following a rally in the Dollar of late and what appears to be a flight to the safety despite an expected 25bp rate cut from the FOMC at its September meeting amid escalating trade tensions and further cracks in global growth.
"We now expect the FOMC to cut by a further 25bps again before year’s end. The risks are for more easing than we anticipate," analysts at ANZ Bank argued:
"The Fed’s future monetary policy path remains highly uncertain. Indeed, as Fed Chair Powell indicated at Jackson Hole, there are no precedents to guide policy in response to this challenging geopolitical environment."
Brexit back to the fore
Besides the trade war and Hong Kong risks, Brexit has come back to the fore with 'remain' groups and Tory rebels seeking to introduce legislation to force a delay of the Brexit deadline until end-January. PM Johnson is to deliver a key speech to Parliament on Tuesday following his statement to the public overnight where he stressed that there will be no delays to Brexit and that a general election is unlikely but said he will call for 14 October if he loses the Brexit vote today in Parliament.
US data on tap
As for data, the US August ISM manufacturing will be important and is expected to be stable at 51.2, consistent with sluggish growth. "July construction spending is seen to rise 0.3%, a partial rebound from the 1.3% decline in June," analysts at Westpac look for.
USD/JPY levels
Valeria Bednarik, the Chief Analyst at FXStreet explained that the USD/JPY pair has been see-sawing around the 38.2% retracement of its August decline at 106.30, currently trading a handful of pips below the level:
"The pair is technically neutral-to-bearish, according to the 4 hours chart, as indicators head nowhere just below their midlines. Also, the price is hovering around the 20 and 100 SMA, both confined to a tight 10 pips’ range. The pair would resume its decline on a break below 106.00, but it will be below the 105.60 support where bears would take over the pair."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD off highs, back to the 1.1050 area ahead of Fed Minutes
EUR/USD keeps its bullish stance well in place, adding to Tuesday's uptick and retesting the vicinity of the 1.1100 neighbourhood on the back of the intense sell-off in the Greenback, all amid steady concerns over the impact of the China-US trade war.
GBP/USD eases to daily lows near 1.2750, USD picks up pace
The recovery attempt in the US Dollar is now prompting GBP/USD to give away part of the earlier advance past 1.2800 the figure and recedes to the mid-1.2700s in a context still widely favourable to the risk complex.
Gold climbs further, retargets $3,100
Gold preserves its bullish momentum and approaches the $3,100 level per troy ounce on Wednesday, underpinned by the steady safe-haven demand in response to trade tensions between the US and China.
Fed Minutes to offer clues on rate cut outlook amid tariff uncertainty
The eagerly awaited minutes from the US Fed’s March 18-19 monetary policy meeting are set for release on Wednesday at 18:00 GMT. During the gathering, policymakers agreed to keep the Fed Funds Target Range (FFTR) unchanged at 4.25%-4.50%.
Tariff rollercoaster continues as China slapped with 104% levies
The reaction in currencies has not been as predictable. The clear winners so far remain the safe-haven Japanese yen and Swiss franc, no surprises there, while the euro has also emerged as a quasi-safe-haven given its high liquid status.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.