USD/JPY – How Much Further will it Fall?

USD/JPY – How Much Further will it Fall?

USD/JPY – How Much Further will it Fall?

It has been a difficult weak for USD/JPY, which traded in a relatively tight 106.25 to 107.90 range. The big story for the dollar this week was Fed Chair Janet Yellen’s speech on Monday. She avoided saying that “rates will rise in the coming months,” and that sent the dollar tumbling because investors interpreted it to mean that a summer rate hike won’t be happening. U.S. data and the Federal Reserve’s monetary policy announcement will be the main focus but the Bank of Japan also has a monetary policy meeting. If Yellen refrains from saying that rates could rise in the coming month(s) and expresses concerns about the economy, USD/JPY could extend its slide below 106 but if she is even slightly more hawkish than the market expects, the currency will rise quickly and aggressively with 108 in sight. Although no changes are expected as well, BoJ Governor Kuroda could strike a dovish tone that may send the yen slightly lower but the impact on the currency should be limited. Technically, support in USD/JPY is at the May low of 105.55 and resistance is at 108.

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