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USD/JPY – Back to Parity?
The weak ISM Non-Manufacturing reading may have dealt a death blow to a September Fed rate hike and along with that to the USD/JPY rally which now appears to be flaming out at 104.00 level.
The sharp decline in ISM which printed at 51.4 versus 55.4 suggests that US economic growth is slowing and that the Fed may be reluctant to raise rates as key gauges of economy decelerate. Technically USD/JPY has formed yet another lower high and remains within a well-defined downtrend that has been in place for most of the year. That downward pressure is likely to push the pair lower for a retest of 100.00 and only a clear break above 105.00 would negate the downward bias.