Fed Chair Powell’s dovish remarks may increase downside potential for USD/JPY, according to WSJ.
Fed Chair Powell’s Dovish Speech Likely Boosts Scope for USD/JPY’s Downside-wsj
📉 The dollar struggles after Powell's dovish speech, hinting at a possible rate cut. Traders eye upcoming inflation data for direction. #Forex #USD #Economy #FederalReserve 📊 https://t.co/9SwbjPn30M
The U.S. dollar remained under pressure in Asian trading on Monday after Federal Reserve Chair Jerome Powell signaled a possible interest-rate cut during his keynote address at the Jackson Hole symposium last Friday. The greenback slid more than 1% in the immediate aftermath of the remarks and was last quoted around $1.17 per euro, a four-week low, while inching up 0.4% to ¥147.46 against the yen as it tried to claw back part of the earlier decline. Powell told policymakers that “downside risks to employment are rising” and indicated the Federal Open Market Committee could lower the federal funds rate as soon as its 17 September meeting. Interest-rate futures now assign roughly an 80% probability to a quarter-percentage-point cut and imply about 48 basis points of easing by year-end, according to LSEG calculations. The softer dollar has emboldened bearish views on the currency pair most sensitive to Fed-BoJ policy divergence. Nomura said it has “higher conviction” in its short USD/JPY position and reiterated a target of 142.00 by the end of October, noting that any hint of a domestic rate increase from Bank of Japan officials would add further momentum to yen strength. Political tension is also weighing on sentiment. President Donald Trump has intensified criticism of Powell and other Fed officials, most recently threatening to fire Governor Lisa Cook, rekindling concerns about the central bank’s independence. Traders will look to the Fed’s preferred inflation gauge—the personal consumption expenditures deflator—on Wednesday and the August non-farm payrolls report due next week for confirmation that the slowdown Powell cited is taking hold.
