- The USD/JPY seeks to extend its rise above 149.00 while operators reduce the Fed Dovish bets.
- The US CPI report showed that the impact of Trump tariffs has begun to influence inflation.
- Commercial tensions between the US and Japan keep Japanese and disadvantage.
The USD/JPY torque faces sales pressure while extending its rise above 149.00 during the European negotiation session on Wednesday. The torque fights while the US dollar (USD) takes a break after reaching a new three weeks, after the signals of the US Consumer Price Index (IPC) of June that indicate that the prices of imported goods have increased.
At the time of writing, the dollar index (DXY), which follows the value of the dollar against six main currencies, clings to profits near the maximum of three weeks around 98.60.
The signal of a trend of resumption in the inflationary pressures upward has forced operators to reduce bets that support interest cuts cuts by the Federal Reserve (FED) at the September monetary policy meeting. Meanwhile, it is widely anticipated that the Fed will maintain stable interest rates in the range of 4.25% -4.50% at the policy meeting later this month.
Looking ahead, investors will focus on the US Production Price Index (IPP) report for June, which will be published at 12:30 GMT. Investors will pay special attention to the data, since they will indicate how much producers have increased the prices of goods and services at the doors of the factories to compensate for the impact of tariffs imposed by President Donald Trump from his return to the White House.
Meanwhile, the Japanese Yen (JPY) remains disadvantaged in the midst of commercial tensions between the US and Japan, since Washington has imposed 25% tariffs on Tokyo imports, which are independent of sectoral taxes, after not being able to close a commercial agreement during the 90 -day tariff pause period. However, Tokyo continues to negotiate on trade with Washington to close a commercial agreement before the new deadline of August 1.
US Dollar – Frequently Questions
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
