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USD/JPY – Will FOMC Push It to 125.00?
Tomorrow all eyes will be on the FOMC meeting which promises to be the marquee economic event of the week. The key question for the market is whether the Fed will hint that its ready to hike rates in September or delay any action until December.
The economic data has been mixed with labor numbers continuing to impress, but wage growth and consumer sentiment lagging. In fact today’s consumer sentiment drop was one of the steepest in recent memory and bodes poorly for future spending. That’s why the market is at a standstill and nowhere is that reflected more clearly than in USD/JPY which has been ranging between 123.00 and 124.00 for the better part of this month.
If the Fed does signal a willingness to hike the pair could snap out of its slumber and take out the key 125.00 level on it way to retest the recent swing highs. On the other hand if the Fed continues to equivocate than USD/JPY could tumble towards 122.00 as speculative long bail out of the pair