USD/JPY Weakens on Fed Rate Cut Speculation and BoJ Pivot
The Japanese Yen has surrendered recent gains against the US Dollar amidst speculation of a Fed rate cut in March and a shift in the Bank of Japan's (BoJ) policies. Despite a day-end recovery, USD/JPY experiences one of its worst trading days in over a year, dropping below 142.00 and closing just above 144.00.
Despite the intraday recovery, USD/JPY had one of its worst trading days in over a year, slipping below 140.00 in November last year. Throughout Thursday's trading session, USD/JPY transitioned from a slight decrease to a drop below the 200-day Simple Moving Average, requiring significant progress for a recovery towards the 147.00 handle. The 50-day SMA is currently positioned higher than the price action on Thursday, pushing towards the 114.90 region.
Expectations of a Fed rate cut weigh on the US Dollar
There is growing speculation that the Federal Reserve has concluded its rate hikes and will commence a rate cut in March, putting pressure on the US Dollar. In contrast, the Bank of Japan is expected to move away from extremely loose monetary policy in the coming months. This, coupled with risk aversion sentiment, offsets the safe-haven appeal of the Japanese Yen.
USD/JPY witnessed a more than 4% decline on Thursday, quickly dropping below 142.00 before larger markets staged a modest recovery, pulling the Japanese Yen (JPY) back into a reasonable price range. USD/JPY closed Thursday down by around 2%, while the Yen entered Friday's market session in the green for the week.
The Yen saw a broader market recovery following unconventional comments from Bank of Japan Governor Kazuo Ueda, unexpectedly hinting at the eventual end of BoJ's negative interest rate policy, possibly in the early part of next year.
Despite the intraday recovery, USD/JPY had one of its worst trading days in over a year, slipping below 140.00 in November last year. Throughout Thursday's trading session, USD/JPY transitioned from a slight decrease to a drop below the 200-day Simple Moving Average, requiring significant progress for a recovery towards the 147.00 handle. The 50-day SMA is currently positioned higher than the price action on Thursday, pushing towards the 114.90 region.
Expectations of a Fed rate cut weigh on the US Dollar
There is growing speculation that the Federal Reserve has concluded its rate hikes and will commence a rate cut in March, putting pressure on the US Dollar. In contrast, the Bank of Japan is expected to move away from extremely loose monetary policy in the coming months. This, coupled with risk aversion sentiment, offsets the safe-haven appeal of the Japanese Yen.
USD/JPY witnessed a more than 4% decline on Thursday, quickly dropping below 142.00 before larger markets staged a modest recovery, pulling the Japanese Yen (JPY) back into a reasonable price range. USD/JPY closed Thursday down by around 2%, while the Yen entered Friday's market session in the green for the week.
The Yen saw a broader market recovery following unconventional comments from Bank of Japan Governor Kazuo Ueda, unexpectedly hinting at the eventual end of BoJ's negative interest rate policy, possibly in the early part of next year.
