Fundamental Market Analysis for April 26, 2024 USDJPY

The Japanese yen (JPY) remains under heavy selling pressure on the first day of the new week, pushing the USD/JPY pair above the psychological 160.00 mark for the first time since October 1986. The significant divergence in the Bank of Japan's policy outlook and the Fed's hawkish expectations continue to undermine the yen amid relatively low liquidity amid the holiday in Japanese markets. Nevertheless, overbought conditions and concerns over possible intervention by Japan to support its currency are helping to limit further losses. In addition, a modest decline in the US Dollar (USD) is keeping the currency pair's gains in check, although significant Yen appreciation still seems elusive amid uncertainty over the Bank of Japan's rate outlook.

In addition, the Personal Consumption Expenditure (PCE) price index released on Friday confirmed expectations that the Federal Reserve (Fed) will wait until September before cutting interest rates. This should continue to serve as a tailwind for the US Dollar. In addition, the overall positive tone on risks could undermine the safe-haven Yen and suggests that the path of least resistance for the USD/JPY pair lies to the upside ahead of the crucial two-day FOMC meeting that begins on Tuesday. This week, investors will also keep an eye on the release of important US macroeconomic data scheduled for early in the new month, including the closely watched Nonfarm Payrolls (NFP) figure on Friday, before making new directional bets.

Trading recommendation: Trade predominantly with Sell orders from the current price level.