The CME FedWatch Tool has reported a decrease in the probability of a June Fed rate cut from 20.7% to 18.8% on Tuesday, April 16. This shift indicates a change in market sentiment towards the US Federal Reserve’s monetary policy. Additionally, the likelihood of a September rate cut has also reduced as the chances of the Fed leaving interest rates unchanged rose from 28.6% to 31.5% on the same day.
Investor attention is focused on Fed speakers’ statements, as well as news updates from the Middle East. The growing tensions in the region following threats of retaliation against a recent attack have added to the uncertainty in the market. These external factors, along with central bank chatter, are influencing near-term trends for the USD/JPY currency pair.
The USD/JPY pair is currently trading above both the 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bullish trend. A break above the April 17 high of 154.722 could lead to a further uptrend towards the 155 handle. On the other hand, a drop below the 153.5 handle may invite selling pressure and push the pair towards the 151.685 support level.
Traders are advised to keep an eye on trade data from Japan, government announcements from the Japanese authorities, news developments from the Middle East, and commentary from central banks. These factors play a crucial role in determining the direction of the USD/JPY exchange rate. Additionally, the Relative Strength Index (RSI) currently stands at 79.40, indicating that the pair is in overbought territory. This could potentially lead to intensified selling pressure around the recent high of 154.722.
The USD/JPY exchange rate is sensitive to a variety of factors, including central bank policies, geopolitical tensions, technical indicators, and market sentiment. Traders must carefully analyze these variables to make informed decisions and navigate the prevailing volatility in the currency market.