Analysis of Recent Market Trends

Analysis of Recent Market Trends

The CME FedWatch Tool recently showed a decline in the probability of a June Fed rate cut, dropping from 20.7% to 18.8% on April 16. This shift comes after a significant decrease from 56.1% to 20.7% just a week prior on April 9. Additionally, bets on a September rate cut have also become less dovish, with the likelihood of the Fed keeping interest rates at 5.50% increasing from 28.6% to 31.5% on April 16. This demonstrates a wavering sentiment among investors regarding potential rate cuts in the near future.

Influential Factors: Fed Speakers and Middle East News

While Fed speakers are expected to impact market sentiment, news updates from the Middle East are also playing a crucial role in guiding investor decisions. Recent threats of retaliation against a Saturday attack are prompting increased caution among traders. The USD/JPY pair’s short-term trajectory is closely tied to central bank communications alongside diminishing expectations of a 2024 Fed rate cut. Economic indicators such as trade data from Japan, government announcements from Japan, and central bank statements will be closely monitored for any clues about future market movements.

Technical Analysis: USD/JPY Trends

The USD/JPY pair currently sits comfortably above both the 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bullish trend in prices. A decisive break above the April 17 high of 154.722 could initiate a move towards the key psychological level of 155. On the other hand, a drop below the 153.5 handle might give bearish traders an opportunity to test the 151.685 support level. The Relative Strength Index (RSI) at 79.40 indicates that the USD/JPY is currently in overbought territory, suggesting a potential increase in selling pressure, especially if the pair reaches the high of 154.722 observed on April 17.

Forecasts

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