USD/JPY Rises as Traders React to OPEC+ Output Cuts, Potential Fed Rate Hike

Highlights

1. OPEC+ announces further production cuts, driving crude oil prices higher
2. Investors closely monitoring inflation’s impact on the economy
3. Traders speculate on potential interest rate increase at Federal Reserve’s next meeting.

Overview

The Dollar/Yen is trading sharply higher as concerns over inflation resurfaced due to a surprise announcement made by major oil producers to cut production even further.

This development caused traders to speculate that the Federal Reserve might have to increase interest rates at its next meeting.

At 09:21 GMT, the USD/JPY is trading 133.495, up 0.698 or +0.53%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $70.20, down $0.03 or -0.04%.

Traders Eye Federal Reserve’s Next Move

OPEC+ announced further production cuts, driving crude oil prices sharply higher as inflation concerns resurfaced, with signs of cooling down but still at a high level.

The market’s attention is now focused on the Federal Reserve’s next move, as it navigates the risks of inflation and economic growth.

Traders are eagerly waiting for any signals from the Federal Reserve, especially regarding the potential for interest rate increases, which could slow down the economy, versus the potential for continued expansion.

Investors are watching the central bank closely as they try to assess the impact of inflation on the economy.

Daily USD/JPY Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 129.641 will signal a resumption of the downtrend. A move through 137.911 will change the main trend to up.

The minor trend is up. This is controlling the momentum.

The short-term range is 137.911 to 129.641. Its retracement zone at 133.776 – 134.752 is the next upside target and potential resistance.

The long-term retracement zone at 132.569 – 131.308 is support.

Daily USD/JPY Technical Forecast

Trader reaction to the short-term 50% level at 133.776 is likely to determine the direction of the USD/JPY on Monday.

Bullish Scenario

A sustained move over 133.776 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the short-term Fibonacci level at 134.752.

Bearish Scenario

A sustained move under 133.776 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the long-term 50% level at 132.569. If this price fails then look for an acceleration into the long-term Fibonacci levels at 131.308.