Technical Analysis US Dollar vs Japanese Yen

The US dollar has been up a bit during the early hours of Monday’s session, but it’s probably worth noting that the US itself and Canada are both celebrating Labor Day during the trading session. So this would have been more along the lines of a half-session. However, short-term pullbacks should find support. And I think the pair is starting to form some sort of bottoming pattern.

The Bank of Japan can’t tighten monetary policy too much, because that would completely ruin the Japanese economy. And Wall Street traders were way ahead of themselves in pricing in the idea of ​​rate cuts. So I think we’re in a situation where we probably need to consolidate or maybe even bounce back a lot to get back to reality. Keep in mind that you get paid to hold this pair, and I think people are going to pay a lot of attention to that again soon.

While the Federal Reserve is expected to cut in September, inflation in the United States is more stubborn than ever thought, so I think they will have to stay tighter for longer at this point. I don’t think they will tighten monetary policy. I just think they will loosen it a little bit, and probably do it very slowly. In other words, the carry trade could very well come back as traders quickly forget about the last “thing” and move on to the next.

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This article was originally posted on FX Empire

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