Will Yen Rally Again?

The US Dollar is under renewed pressure today as a fresh climb in safe-haven assets steals the show midweek. Markets are preparing for comments from Fed chairman Powell later today as well as incoming headlines around trade negotiations which begin later today between Japanese and US officials. There has been plenty of speculation around the potential for exchange rate levels to be included in the talks with many players sensing the talks will see both sides agreeing to a stronger JPY as part of any deal. Given the current bearish sentiment in USD and natural safe-haven demand for JPY, any such agreement could be firmly bearish for USDJPY into the end of the week, paving the way for a move down to the 2024 lows next.

Dovish USD Risks Into Powell Speech

Alongside the trade talks, traders will also be monitoring comments from fed chairman Powell who speaks later today. On the back of very dovish comments from Fed’s Waller earlier in the week, traders are bracing for the likelihood that Powell echoes these dovish sentiments, which will create fresh downside pressure in USD if seen. Any comments from Powell regarding concern for US economic prospects as a result of the trade war should be particularly market moving with USDJPY poised to head lower today.

Technical Views

USDJPY

The break below 144.32 has stalled for now with price settling into a 4-day range. However, with momentum studies bearish, risks of a fresh push lower are seen and while that level holds above, 140.59 remains the next target for bears. If we push higher, 146.81 and the bear trend line will be key resistance to monitor.