The Japanese Yen (JPY) drifts lower against its American counterpart on Wednesday and moves back closer to its lowest level since August 16 touched earlier this week. Data published on Tuesday showed that Japan's real wages fell in August after two months of gains in wages, while household spending also declined, raising doubts about the strength of private consumption and a sustained economic recovery. This comes on top of blunt comments on monetary policy by Japan's new Japanese Prime Minister and fuels uncertainty over the Bank of Japan's (BoJ) plans for additional rate hikes, which, in turn, is seen weighing on the JPY.
Furthermore, news of a possible Hezbollah-Israel ceasefire undermined demand for the safe-haven JPY. The US Dollar (USD), on the other hand, approaches a seven-week high touched last Friday on the back of reduced bets for a more aggressive policy easing by the Federal Reserve (Fed). This, in turn, lifts the USD/JPY pair beyond the mid-148.00s heading into the European session. It, however, remains to be seen if bulls can capitalize on the move amid fears that Japanese authorities will intervene to support the domestic currency and ahead of the release of the FOMC meeting minutes later during the North American session.
From a technical perspective, the emergence of some dip-buying on Tuesday comes on the back of last week's move beyond the 50-day Simple Moving Average (SMA) for the first time since mid-July and favors bullish traders. Moreover, spot prices now seem to have found acceptance above the 148.00 mark, or the 38.2% Fibonacci retracement level of the July-September downfall. This, along with the fact that oscillators on the daily chart have been gaining positive traction, suggests that the path of least resistance for the USD/JPY pair is to the upside. Any further move up, however, might confront some resistance near the 148.70 zone ahead of the 149.00 round figure. Some follow-through buying beyond the weekly top, around the 149.10-149.15 region, will reaffirm the positive outlook and allow the pair to reclaim the 150.00 psychological mark.
On the flip side, the overnight swing low, around the 147.35-147.30 region, now seems to protect the immediate downside ahead of the 147.00 mark. A convincing break below the latter could drag the USD/JPY pair to the 146.45 intermediate support en route to the 146.00-145.90 region and the 145.00 confluence support. The latter comprises the 50-day SMA and the 23.6% Fibo. level, which if broken decisively will suggest that the recent recovery from the vicinity of mid-139.00s, or a 14-month low has run its course and shift the near-term bias in favor of bearish traders.
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Read more.Next release: Wed Oct 09, 2024 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
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