USD/JPY Volatility Ahead of Warsh Speech
The USD/JPY currency pair has been experiencing fluctuations in trading on Thursday, ahead of Chairman Kevin Warsh's speech at Jackson Hole on Friday. This event could influence market expectations about potential interest rate hikes by the Federal Reserve later this year.
Christopher Lewis, a technical analyst and market commentator, is optimistic about buying the dollar against the yen, citing the interest rate differential as a key driver of the pair's movement. He notes that most traders believe there will be no rate hike by the end of the year, but questions whether this will reduce the interest rate differential enough to make the carry trade less viable.
The 160 yen level is seen as a barrier for the USD/JPY pair, with Lewis indicating that clearing this level would indicate a repudiation of the idea of killing off the carry trade in the short term. The Bank of Japan has intervened three times to slow down the currency's depreciation, but Lewis believes this trend will continue.
Lewis is already long on the USD/JPY pair and plans to add more if it breaks above 160 yen. He notes that a sell-off two weeks ago was brutal, but for those positioned correctly, it can be an opportunity to take advantage of the situation.