The USD/JPY pair is facing resistance near the important level of 150.00 as the US Dollar struggles to continue its recent rally. Traders are shifting their expectations after pricing out the possibility of a larger interest rate cut by the Federal Reserve in November. Meanwhile, Japan’s National core CPI has accelerated to 2.1% in September, indicating higher inflationary pressures in the country. Despite the current selling pressure, the outlook for USD/JPY remains positive.
Overall market sentiment appears to be positive, with Democratic candidate Kamala Harris leading national polls against Republican Donald Trump. This has led to gains in S&P 500 futures in the early New York session. Additionally, 10-year US Treasury yields have seen a slight decline, hovering near 4.086%. The US Dollar Index has retreated from its recent high of 103.90 to around 103.50.
Investors are anticipating a moderate interest rate cut path from the Federal Reserve, leading to a firmer outlook for the US Dollar. Recent upbeat economic data from the United States has shifted expectations around Fed rate cuts. According to the CME FedWatch tool, there is a prediction of a 50 bps decline in interest rates for the remainder of the year, with expectations of a 25 bps cut in both November and December.
In terms of economic indicators, Japan’s National core Consumer Price Index (CPI) excluding food and energy has shown a faster rise of 2.1% in September compared to 2% in August. This higher inflation rate suggests that the Bank of Japan (BoJ) may consider further interest rate hikes later this year. The CPI data, released monthly by the Statistics Bureau of Japan, measures the price changes of goods and services purchased by households nationwide. The YoY comparison is used to gauge inflation trends, with a higher reading considered bullish for the Japanese Yen (JPY).
In conclusion, the USD/JPY pair is facing resistance near 150.00 as the US Dollar rally pauses and investors reassess their expectations for Fed rate cuts. Positive market sentiment and higher inflation in Japan are influencing the currency pair’s movements. As the Federal Reserve is anticipated to follow a moderate interest rate cut path, the US Dollar outlook remains firm. Traders will continue to monitor economic data and geopolitical developments for further direction in the USD/JPY pair.
