Created on October 22, 2024

• In my daily analysis of the USD/JPY pair, the pair has exploded to the upside during the Monday session, as we have broken above the ¥150 level, an area that of course is very important.
• Now that we are above that area, it looks as if short-term pullbacks will continue to get bought into, especially as the 200 Day EMA has offered significant support.
• In general, this is an exhaustively bullish mood, and now that we have broken above the crucial ¥150 level, we could start to see momentum pick up.

Interest Rate Differential Continues

The interest rate differential continues in this pair, as the market has broken to the upside, and I think we will continue to see traders hold onto this pair in order to collect swaps at the end of every day.

After all, the Bank of Japan has recently admitted that he cannot tighten monetary policy any further, so therefore think you get a situation where we will see the upward trajectory continue.

After all, I like the idea of buying short-term pullbacks that we can take advantage of, as the market has shown itself to be important.

Even if we see a breakdown from this area, the 200 Day EMA is likely to provide strong support. Should the price fall below that level, additional support can be found around the ¥148 level, with the 50 Day EMA just beneath it. This creates a scenario where traders may view any dips as opportunities to buy “cheap US dollars”.  Keep an eye on the USD/JPY live chart for real-time movements and potential trade setups.

=On the upside, I think we’ve got a situation where the pair could very easily go to the ¥153.50 level, which is an area that has been noisy in the past.

All things being equal, I do think that the carry trade is back, and therefore we will continue to see this move to the upside. All things being equal, I have no interest in selling this pair.

Ready to trade our daily forex forecast? Here are Japan’s Best Forex Brokers to choose from. 

• GBP/USD trades slightly below 1.3000 in the European session on Tuesday.
• Key support area seems to have formed in the 1.2950-1.2960 area.
• BoE Governor Bailey will deliver a speech later in the session.

Following a two-day recovery, GBP/USD turned south on Monday and lost 0.5% on the day. The pair struggles to gather recovery momentum early Tuesday and trades slightly below 1.3000.

Markets adopted a cautious stance at the beginning of the week amid escalating geopolitical tensions in the Middle East, allowing the US Dollar (USD) to benefit from safe-haven demand. At the time of press, US stock index futures were down between 0.4% and 0.6%.

A bearish opening in Wall Street, followed by an extended slide in major equity indexes could allow the USD to preserve its strength and force GBP/USD to stretch lower.

The US economic calendar will feature the Richmond Fed Manufacturing Index data for October, which is unlikely to trigger a noticeable market reaction.

In the early American session, Bank of England (BoE) Governor Andrew Bailey will deliver a keynote address at the Bloomberg Global Regulatory Forum in New York. Since he is unlikely to comment on the policy outlook, this event could have little to no effect on Pound Sterling’s valuation. The next important data release for GBP/USD will be S&P Global’s preliminary October Manufacturing and Services Purchasing Managers Index (PMI) data for the UK and the US on Thursday.

GBP/USD Technical Analysis

GBP/USD trades within the descending regression channel coming from late September and the Relative Strength Index (RSI) indicator on the four-hour chart stays well below 50, reflecting the bearish bias.

On the downside, the lower limit of the descending channel and the 100-day Simple Moving Average (SMA) form a strong support area at 1.2950-1.2960 ahead of 1.2900 (round level, static level). Looking north, first resistance could be seen at 1.3050 (static level, upper limit of the descending channel) before 1.3090-1.3100 (Fibonacci 23.6% retracement of the latest downtrend, static level) and 1.3140 (50- day SMA).

• The dollar traded near an over 2-month high against its peers.

• Traders price an 89% chance of a 25-bps Fed rate cut in November.

• Economists expect the next BoJ rate hike in March next year.

The USD/JPY price analysis shows that the bets for a Trump win are rising, boosting the dollar against the yen two weeks before the presidential election. Meanwhile, Japan’s general election might also affect the yen by changing the Bank of Japan’s policy outlook. 

–Are you interested to learn more about Australian forex brokers? Check our detailed guide-

The dollar extended recent gains to trade near an over 2-month high against its peers. Bets ahead of the November US presidential election show Trump in the lead, supporting the dollar. A Trump win is bullish for the dollar, increasing the likelihood of high interest rates. However, the race is tight, and things might change in the time before the election. 

At the same time, markets are still digesting the new outlook for a gradual Fed rate-cutting cycle. A few weeks back, rate cut expectations indicated a 50-bps cut in November. However, that quickly changed with incoming data. Currently, there is an 89% chance of a 25-bps rate cut in November. 

The US will release business activity data before the policy meeting to show the state of the manufacturing and services sectors. 

Meanwhile, in Japan, the upcoming October 27th general election could change the majority in parliament and affect Ishiba’s position. Such changes could also change the outlook for monetary policy in Japan. The Bank of Japan has paused after implementing its first rate hike in March. Moreover, a recent Reuters poll showed that most economists expect the next rate hike to be in March next year. 

USD/JPY key events today

There won’t be any high-impact reports from the US or Japan today. Therefore, the dollar might extend its rally.

USD/JPY technical price analysis: Bulls make fresh highs

On the technical side, the USD/JPY price is climbing to make a new high in the uptrend. It trades well above the SMA, with the RSI in bullish territory. However, for some time, the price has stayed near the SMA. Consequently, the slope of the uptrend has slowed. 

If you are interested in guaranteed stop-loss forex brokers, check our detailed guide-

At the same time, while the price is making higher highs, the RSI has made lower highs, indicating fading enthusiasm. If this persists, the trend might reverse to the downside. However, if bulls maintain control, the price will revisit the 152.02 resistance level.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

• The Bank of England governor might drop hints on future policy moves. 

• The greenback was steady as traders priced a less aggressive Fed easing cycle.

• US presidential election bets suggest a Trump win.

The GBP/USD outlook shows a rebound from recent lows as market participants await a speech from BoE governor Andrew Bailey. Meanwhile, the dollar remained near a two-and-a-half-month high as markets adjusted their Fed rate cut expectations and awaited the upcoming US elections.

–Are you interested to learn more about Australian forex brokers? Check our detailed guide-

The Bank of England governor is set to speak this week and might drop hints on future policy moves. Therefore, traders will pay close attention to his speech later today. Despite Friday’s upbeat retail sales report, the UK economy has slowed down and is performing poorly compared to the US economy. At the same time, inflation eased below the BoE’s 2% target, prompting market participants to increase rate-cut bets. As a result, UK yields fell, weighing on the pound. 

Meanwhile, despite a slight retreat, the greenback was steady as traders priced a less aggressive Fed easing cycle. Recent economic reports have slowly shifted the outlook for rate cuts from aggressive to gradual. The US economy is holding up well, with the labor market and sales beating forecasts. At the same time, inflation increased more than expected in September, reducing the pressure to cut rates. 

Meanwhile, Fed policymakers have assumed a more cautious tone. Although they expect more rate cuts, the size and pace are unclear. Currently, traders are pricing an 89% chance of a 25-bps rate cut in November. 

Elsewhere, the US presidential election is on the horizon, and bets suggest a Trump win. If Trump wins, his tax and tariff policies might increase inflation and interest rates, increasing demand for the dollar.

GBP/USD key events today

GBP/USD technical outlook: Double bottom pauses downtrend

On the technical side, the GBP/USD price trades between the 30-SMA resistance and the 1.2975 support level. The bias is bearish because the indicators and price action suggest a downtrend. The SMA is above the price, and the RSI is below 50, in bearish territory. 

If you are interested in guaranteed stop-loss forex brokers, check our detailed guide-

However, it has made a bearish divergence, indicating that the downtrend might be at its end. Furthermore, the price has made a double bottom at the 1.2975 support level. Therefore, the price might soon break above the SMA to revisit the 1.3100 resistance.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Created on October 21, 2024

• The USD/JPY exchange rate continued to rise as the US Dollar Index (DXY) and bond yields rose to their highest point in months.
• According to Forex trading, the USD/JPY pair rose to a high of 150.28, its highest level since August 1, and 7.5% above its lowest point this year.

Japan’s Inflation and BOJ Expectations

The USD/JPY pair maintained its upward trajectory after Japan released encouraging inflation data on Friday. According to the Statistics Bureau, Japan’s core consumer price index declined by 0.3% in September, following a 0.5% increase in the previous month. Obviously, this translated into a year-on-year increase of 2.5%, lower than the previous 3.0%.

The core CPI came in at 2.4% in September, above the median estimate of 2.3%. also, it was an improvement from the previous increase of 2.8%. The figures suggest that inflation in Japan is moving in the right direction and is likely to reach the Bank of Japan’s 2.0% target in the coming months. Analysts expect the Bank of Japan to adopt a wait-and-see approach before committing to raising interest rates at upcoming meetings. Furthermore, unlike other global central banks, the Bank of Japan has adopted a relatively hawkish tone in the past few months. It first raised interest rates by 0.10% earlier this year and then by another 0.25% in July. Also, the 0.25% rise caused major global volatility as investors began to unwind the carry trade on the Japanese yen. A carry trade is a situation where investors borrow a currency with a lower return and invest in another currency with a higher return. For a long time, investors have borrowed the negative-yielding Japanese yen and invested in other assets in the United States, Australia and other countries. Therefore, with the Japanese economy weakening and inflation moving in the right direction, the Bank of Japan is likely to keep interest rates at the current rate for some time.

Moreover, this explains why Japanese government bond yields continue to rise. The 10-year bond yield rose to 0.97% on Friday, its highest level since August 7, and a 32% increase from its September low.

Federal Reserve Actions

Also, The USD/JPY exchange rate made a strong comeback due to the Fed’s actions. At its last meeting, the bank decided to cut US interest rates by 0.50%, the largest rate in more than four years. Since then, the US has posted strong economic figures. Data released earlier this month showed that the unemployment rate fell to 4.1% in September, the lowest level in two months.

The US economy added more than 254,000 jobs in September while wage growth continued to expand during the month. Meanwhile, inflation in the US fell at a slower pace than expected. The US headline CPI fell from 2.5% in August to 2.4% in September. On the other hand, core inflation remained unchanged at 3.2%. Overall, the latest US economic data showed that core retail sales rose by 0.5%. Meanwhile, the headline figure rose to 0.4%. Both initial and continuing jobless claims figures were better than expected last week. Therefore, the Fed is likely to act in two ways at the next meeting: cut interest rates by 0.25% or keep them steady.

This explains why the US Dollar Index (DXY) rose to 103.87 dollars, its highest level since August 2. It has risen by more than 3.52% from its yearly low. Also, US Treasury bond yields have risen. The yield on 10-year bonds rose to 4.088%, its highest level since July 31. Similarly, the yield on 5-year bonds rose to 3.9%.

USD/JPY Technical Analysis and Expectations Today:

The daily chart shows that the USD/JPY exchange rate made a strong comeback this week. It rose to 150, its highest level since July 31, and 7.15% from the August low. The pair moved above the 38.2% Fibonacci retracement point. Also, it crossed the 50- and 100-day exponential moving averages (EMA). The Relative Strength Index (RSI) moved above the neutral point at 50, while the MACD crossed the zero line. Therefore, the USD/JPY pair is likely to continue its rise as bulls target the next point at 153.70, which is the 23.6% retracement point.

Ready to trade our daily USD/JPY forex forecast? Here are the best forex brokers in Japan to choose from. 

Created on October 22, 2024

• As you can see, the euro initially did try to rally a bit during the trading session on Monday, but then gave back quite a bit of the gains to continue to see a lot of sideways action.
• Perhaps we are trying to form some type of basing pattern.
• At least, this is the situation we find ourselves in at the moment.

The 1.08 level underneath of course is a large round psychologically significant figure and that of course, I think, will have a certain amount of influence. We are currently below the 200 day EMA, but at this point, I think that the 1.08 level of course will continue to matter. And if we can turn around and bounce back to the upside, then I think it’s just more of the same working off the froth. The US dollar has exploded in value against the euro, and therefore the downtrend has been rather massive. If the market were to turn around and take out the 200 day EMA above, then I think it’s possible that we could go looking to the 1.10 level.

On a Move Below Support at 1.08

On the other hand, if we break down below the 1.08 level, perhaps closing on a daily candlestick underneath the 1.0775 level, then I think it opens up a move down to the 1.07 level, followed by the 1.06 level. This is a market that has got far too ahead of itself, so it does make a certain amount of sense. Therefore, I think you’ve got a situation where people are trying to sort out where they’re going next. But right now, I think it’s more or less trying to find stability and looking for that next catalyst. Yes, the Monday candlestick has been very ugly so far, but we haven’t broken through anything significant as far as support is concerned. So, I’m not sure how much this will change my analysis other than I think we still have some work to do before we make our next big move.

Ready to trade our EUR/USD Forex forecast? Here’s a list of some of the top forex brokers in Europe to check out.