Over 70% Odds of Fed Rate Cut in December: Yen Intervention Possible 

In this comprehensive analysis, Ultima Markets brings you an insightful breakdown of the USDJPY for NOV 14th, 2024. 

Key Takeaways 

• US inflation data: The consumer price index (CPI) released on Wednesday showed that the core CPI index, which excludes food and energy costs, rose 0.3% for the third consecutive month. After the data basically met economists’ expectations, Fed spokesmen on Wednesday generally expressed their belief that the inflation rate will continue to move downward toward the 2% target. 

• Rate cut in December: After the data was released, traders expected the Fed to cut interest rates in December. The latest market pricing probability exceeded 70%, while it was only 60% before the data was released. However, 1 month of data is unlikely to change the Fed’s interest rate outlook, especially in the context of a weak labor market. As Kashkari said on Tuesday, he may support a pause in another 25-basis point rate cut if there is an upward surprise in inflation data between now and the Fed’s December meeting. 

• The yen may trigger intervention: Under the expectation of loose fiscal and monetary policies of the Federal Reserve, the surge in U.S. Treasury yields has put pressure on the yen. The yen has now fallen to levels close to when Japanese authorities last intervened to support the yen, spending a record 9.8 trillion yen ($63 billion) in interventions from late April to early May this year, and another 5.5 trillion yen in early July after the yen fell to its lowest level since 1986. 

Technical Analysis 

USDJPY Daily Chart Insights 

(USDJPY Daily Price Chart, Source: Ultima Markets MT4) 

• Stochastic oscillator: The indicator has not been fully adjusted, and it has begun to send bullish signals when it falls above the median line. In theory, the market is either very strong or there is a probability of a false breakout. 

• Price Action: USD/JPY rose for three consecutive days this week, breaking through last week’s high of 154.70. After yesterday’s closing price effectively stood above the resistance price, from the perspective of price behavior, there is a probability of a rapid rise today. 

• Order Block: It is worth noting that the upper side will face the resistance price of the previous order block (OB) at 156.161. If the exchange rate can still effectively stand above the resistance price, the upper resistance space will open. 

USDJPY 1-hour Chart Analysis 

(USDJPY H1 Price Chart, Source: Ultima Markets MT4) 

• Stochastic oscillator: The indicator sends a short signal in the oversold area, and the exchange rate is under selling pressure during the Asian session. It is worth noting that the exchange rate and the indicator are both higher than the previous highs, and there is no top divergence pattern, so it is expected to continue to rise after adjustment. 

• Target price: The adjustment decline during the Asian session looks at yesterday’s resistance price of 155.143. After the exchange rate broke through the resistance yesterday, it will be converted into a support price today to prevent the exchange rate from falling further. 

USDJPY Pivot Indicator 

(USDJPY M30 Price Chart, Source: Ultima Markets APP) 

• According to the trading central in Ultima Markets APP, the central price of the day is established at 154.93, 

• Bullish Scenario: Bullish sentiment prevails above 154.93, first target 156.43, second target 156.86. 

• Bearish Outlook: In a bearish scenario below 154.93, first target 154.21, second target 153.78. 

Conclusion 

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