USD/JPY at Key Support Zone Ahead of FED and BOJ
We have a very important week ahead, with the much-anticipated interest rate decision from the Fed. The focus is not just on whether they will cut rates, but by how much—will it be 25 or 50 basis points? A 25 basis point cut could strike a balance between inflation concerns and potential recession fears, especially considering recent unemployment figures weren’t that bad, and CPI also softened as expected last week. Keep in mind that the dollar has moved lower over the last few weeks, and if we see a 25 basis point cut, the dollar could gain slightly. However, if the Fed opts for a 50 basis point cut, we expect the dollar to continue its downward trend immediately.
If there is going to be buy a rumor sell the news reaction, then watch USD/JPY for a rally. COT data shows extreme longs for JPY, so possibly there will be some reversal.
Also, USD/JPY has five waves down into 137-139 area, so clearly there can be some recovery. BOJ also this week.
