Market Overview:
1. This is Weekly Chart for US Bond Yield Spreads (10Y-02Y). From the chart, we could understand that the market institution currently speculate for recession theme in cycle (soon); The market capital flow is betting the early cycle of easing monetary soon after FED paused its interest rate at 5.50% since July 2023.
2. Now the FED main concern economic data is Inflation (CPI) that resulting 3.2% - 3.4% to slowdown back to 2.0% forecast.
3. As long as the US Inflation remains above 3.0% and above in data, I expect the FED would hold its interest rate as 5.50% for longer term; In another term, IF the US CPI result shows below 3.0% in next 1-2 month, then the FED would move faster to ease its monetary policy soon.
4. As summary, I expect the US Bond Yield Spreads (10Y-02Y) is moving upside that expecting the early easing of monetary soon.
5. Above is the US Inflation (CPI) on year-to-year results, which show that the US inflation has been tamed down from 9.1% to 3.2% since FED interest hikes up till 5.50% (July 2023).
6. Currently FED is waiting to see the inflation to drop below 3.0% for next
decision, or FED would hold its interest rate at 5.50% till inflation turns
down to meet its 2% forecast.
7. Above is USD Index (DXY) Daily chart (25/03/2024). From the chart we could see the USD Index has been bearish since Oct / Nov 2023, after the US CPI data dropped into 3.0% - 3.7% range. From TA outlook, the daily chart showed Double Top pattern, means TWO times rejection at level 107.00.
8. Thus, from current fundamental outlook, I can’t see any new catalyst / driver to move up the USD Index up to 106.00 level, this means the odds for USD Index more on bearish picture soon.
9. As my TA outlook, the USD Index most likely would challenge the Resistance Trendline and failed in next picture. Thus my bias more on Sell DXY in theme.
Bank Of Japan (BOJ) for Japan Yen outlook:
a) From the above two headlines news, BOJ has made a historic rate hike for first time in 17 years, after the Japan Inflation spiked up for many months , now the BOJ interest rate is changed from (-0.1%) to 0.1% rate.
b) BOJ has stated to opp its current inflation 2.8% (approx.) back to 2%, the monetary policy has been tapped accordingly from QQE to QE.
c) Next, let’s take a look on above chart – Inverse Relationship for Gold & USDJPY
Weekly Chart (25/03/2024):
From the chart, we could see the Gold price recently spikes up to 2,176.00 level, this show the market institution is betting on recession theme on coming.
USDJPY Trade Idea:
To my summary, look at above my fundamental analysis on USD Index and JPY, I have forseen the USDJPY has great opportunity to SELL / Short in my bias, seeing USD Index has no much new driver / catalyst to move further up, while BOJ starts to tap its monetary policy 1st time in 17 years and under market recession theme for safety asset trade, I expect the market capital flow soon would diversify partial capital from Gold to JPY in next, thus USDJPY is another higher odd for SELL in reason.
Hope
my fundamental and technical analysis would help you for good profit soon,
thank you!