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Tariffs in the United States and Japan may escalate, the Bank of Japan, the Federal Reserve, the Pigeon Eagle War is about to break out?
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Hello everyone, today XM Foreign Exchange will bring you "[XM official website]: US-Japan tariffs may be escalated, the Bank of Japan, the Federal Reserve, the Pigeon and Eagle War is about to break out?" Hope it will be helpful to you! The original content is as follows:
On Thursday (August 7), the US dollar bottomed out against the Japanese yen and rebounded, with trading around 147.23, a drop of -0.09%; Federal Reserve officials released dovish guidance during the session, and Trump said that he would first select a "temporary" candidate to fill the vacancy of Federal Reserve Board of Directors after Kugler resigned and eouu.cnplete the remaining term. Affected by this, the exchange rate fell to 146.69 for a while, approaching the weekly low of around 146.61.
At the same time, on Thursday (August 7), the Asahi Shimbun quoted White House officials that U.S. President Trump may impose an additional 15% reciprocal tariff on all Japanese imported goods without exemption on products that already have more than 15% tariffs;
In addition, the uncertainty of the Bank of Japan's interest rate hikes and the general positive risk sentiment in the market have weakened the attractiveness of the safe-haven yen. This situation still needs to be examined in Japan's recent political and economic context.
The ruling Liberal Democratic Party lost in the House of Lords election on July 20, and opposition calls for increased spending and tax cuts have sparked market concerns about Japan's fiscal health; data released on Wednesday showed that Japan's real wages fell for the sixth consecutive month in June, further exacerbating concerns about the consumption-led recovery - all of which suggest that the Bank of Japan's interest rate hikes may be delayed and suppress the yen.
However, the Bank of Japan has repeatedly stated that if economic growth and inflation meet expectations, there is still a possibility of further interest rate hikes before the end of this year, which makes the Japanese yen bears afraid to act rashly and also provides certain support for the US dollar against the Japanese yen.
Other side of the exchange rate trend is the fluctuations in the US dollar and the Fed's policy expectations. The dollar rebounded slightly from more than a week lows hit on Wednesday, pushingThe dollar-JPY exchange rate rebounded above the mid-term level of 147.00 in the past hour.
But the rebound space of the US dollar may be limited: the US dollar index fell to a one-week low on Wednesday, as the market expected the Fed to cut interest rates this year exceeds previous expectations; the July US non-farm employment report showed that labor market conditions deteriorated significantly, and the US ISM service industry PMI data released on Tuesday also highlighted the continued drag on the economy by Trump's unstable trade policy, which strengthened the market's expectations that the Fed will resume its interest rate cut cycle in September (it is expected to cut interest rates at least twice at the end of the year, at 25 basis points each), and thus put pressure on US Treasury yields and the US dollar.
The differentiation of policy outlook between the Bank of Japan and the Federal Reserve provides support for the yen. The market generally expects the Federal Reserve to cut interest rates by reducing borrowing costs in September, while uncertainty about the possibility of a Bank of Japan's interest rate hike has not eouu.cnpletely subsided. This differentiation reminds traders who are bearish on the yen to remain cautious, and also makes it necessary to wait for the short side momentum to slowly lose its momentum before the US dollar against the yen has a major positive for reversal.
From a technical perspective, this week's US dollar rebounded from the 200 moving average (about 146.60 area, that is, the weekly low) against the yen, which is a positive for bulls.
But the oscillator on the chart has not yet confirmed the bullish outlook, and the price has been difficult to break through the 38.2% Fibonacci retracement level of the July monthly low, so it is still necessary to remain cautious before the price continues to break through the 147.80-147.85 area.
If the area is broken, the exchange rate may stand above the 148.00 integer mark, further climbing to the 148.45-148.50 area, and even extending to around 149.00 (23.6% Fibonacci retracement level); on the contrary, the Asian trading period low (about 147.15 area) and the 147.00 mark constitute instant support, followed by a intensive trading area of 146.75 (4-hour chart 200SMA and 50% Fibonacci retracement level). If this point is decisively fallen, it may open a deeper decline, and the exchange rate may accelerate the testing of the level below 146.00 (61.8% Fibonacci retracement level), and even touch the 145.00 psychological mark.
In the short term, traders need to focus on U.S. weekly initial jobless claims data released later in the North American trading session, as well as speeches from members of the Federal Open Market eouu.cnmittee (FOMC) – factors along with trade-related headlines will collectively impact the short-term trend of the dollar against the yen.
The above content is all about "[XM official website]: The US-Japan tariffs may be upgraded, the Bank of Japan, the Federal Reserve, the Pigeon Eagle War is about to break out?", which was carefully eouu.cnpiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your transactions! Thanks for the support!
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