USD/JPY Sell-Off Looms Amid Rate Decision Uncertainty
The USD/JPY currency pair has maintained a bullish bias for over five years, but recent developments have raised questions about a potential larger retracement. This week's rate decisions from Japan and the US could be crucial in determining the direction of the pair.
Scott Bessent has warned that he knows what the Bank of Japan will do this week, which could have significant implications for the market. A sell-off in USD/JPY could have consequences elsewhere, particularly in tech stocks, due to the carry trade unwinding.
The trend in USD/JPY has been characterized by aggressive retracements, with a clear change-of-pace observed over the past month-plus. The recent dual intervention in late-July has shifted matters, and the Fed's rate meeting on Wednesday is expected to push this divergence further.