BoJ’s Stance Keeps USD/JPY Elevated

Economic

Summary:

The Japanese Yen (JPY) hit a one-month low against the US Dollar (USD/JPY) as the Bank of Japan (BoJ) maintained its dovish policy, contrasting with the Federal Reserve's hawkish stance.

BUY USDJPY

Close Time

CLOSED

156.600

Entry Price

160.000

153.600

156.302 -1.112 -0.71%

107.0

Pips

Profit

153.600

157.670

Exit Price

156.600

Entry Price

160.000

The Japanese Yen (JPY) hit a one-month low against the US Dollar (USD) after the Bank of Japan (BoJ) decided to maintain its ultra-loose monetary policy, signaling no immediate plans for a rate hike. This decision, coupled with the Federal Reserve’s hawkish tone on interest rates, has created a challenging environment for the Yen, prompting it to lose further ground against its American counterpart. As market participants digest these developments, the JPY’s trajectory appears increasingly vulnerable to external pressures.

At the conclusion of its two-day policy meeting, the BoJ announced it would keep its short-term interest rate target in the range of -0.1% to 0.25%, consistent with its long-standing commitment to monetary easing. Governor Kazuo Ueda, in his post-meeting press conference, reiterated that the central bank’s focus remains on achieving sustainable inflation accompanied by higher wages and increased private consumption. However, the absence of fresh guidance on a potential rate hike, even as inflationary pressures loom, disappointed market participants. Ueda’s acknowledgment of uncertainties surrounding economic growth and prices further dampened hopes for a more proactive monetary stance.

The BoJ’s caution contrasts sharply with the Federal Reserve’s assertive approach. Despite global economic uncertainties, the Fed has consistently signaled its readiness to maintain higher interest rates for an extended period. This divergence in policy outlook has made the JPY less attractive, particularly against the backdrop of rising US Treasury yields.

The Federal Reserve’s latest monetary policy decision underscored its commitment to combating inflation. While the central bank lowered its benchmark rate by 25 basis points to the 4.25%-4.50% range, its updated “dot plot” projections revealed a less aggressive path for rate cuts in 2025. Fed Chair Jerome Powell emphasized that inflation remains above the 2% target, justifying the need for a restrictive policy stance.

This hawkish outlook has bolstered US bond yields, with the 10-year Treasury yield reaching its highest level since May 31. The surge in yields has, in turn, propelled the US Dollar to a two-year high, further exacerbating the JPY’s weakness. Investors are now pricing in the likelihood of prolonged monetary tightening in the US, a scenario that diminishes the appeal of lower-yielding currencies like the Yen.

While the broader macroeconomic environment weighs heavily against the Yen, geopolitical uncertainties and risk-off sentiment could provide intermittent support. Concerns over global trade tensions and regional conflicts have historically driven demand for safe-haven assets, including the JPY. However, the Yen’s role as a safe haven is being challenged by its diminished yield advantage and the allure of the USD.

Technical Analysis

The USD/JPY pair continues to exhibit a strong bullish bias, with prices breaching the key resistance level of 154.95. The pair is now testing its recent high of 156.74, indicating the potential for further gains in the near term. The immediate support level is seen at 154.50, while a break below 154.25 could trigger a corrective move towards 152.70.

Conversely, sustained momentum above 156.00 would pave the way for additional upside, reflecting the dominance of USD bulls in the current environment. Traders are advised to monitor US macroeconomic data, including the final Q3 GDP print and weekly initial jobless claims, for short-term trading opportunities.

TRADE RECOMMENDATION

BUY USDJPY

ENTRY PRICE: 156.60

STOP LOSS: 153.60

TAKE PROFIT: 160.00

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Manuel

Cryptocurrency

Summary:

BUY BTC-USDT

Close Time

CLOSED

99981.3

Entry Price

110000.0

95000.0

95666.6 -1857.5 -1.90%

4981.3

Pips

Loss

95000.0

Exit Price

99981.3

Entry Price

110000.0

Bitcoin (BTC) has plunged below the significant $100,000 mark, causing turbulence in the cryptocurrency market. The decline follows hints from the U.S. Federal Reserve (Fed) about tighter monetary policy in the coming year, sparking a wave of sell-offs.

On Wednesday, BTC dropped over $6,000 in the afternoon (EDT) after the Fed announced its third consecutive 0.25% interest rate cut during its December 18 meeting. The central bank has now reduced rates by a cumulative 1% over three sessions, leaving its benchmark range at 4.25%-4.5%. While the move aligned with market expectations, the Fed’s cautious stance on further cuts for 2025 rattled investors, dampening appetite for riskier assets.

Fed Chair Jerome Powell highlighted the bank's measured approach, stating, “We must proceed carefully in assessing additional policy rate adjustments. A slow pace risks undermining the labor market, while rapid cuts could reignite inflationary pressures.” Powell emphasized that further rate cuts would depend on sustained progress in inflation and labor market stability.

The cryptocurrency market mirrored the broader sell-off seen in equities. The S&P 500, Nasdaq Composite, and Dow Jones fell by 2.96%, 3.62%, and 2.61%, respectively. Bitcoin followed suit, losing over 5% and briefly dipping below $100,000 after reaching a new all-time high of $108,000 just a day earlier. The sell-off wiped out more than $1.6 billion from the global cryptocurrency market cap.

Looking ahead to 2025, the market anticipates an expanded range of cryptocurrency-based ETFs. Initial offerings are expected to include Bitcoin and Ethereum, followed by Litecoin due to its operational similarity with BTC. Other assets like HBAR, XRP, and Solana may face delays due to regulatory challenges. A significant shift is anticipated with the exit of SEC Chair Gary Gensler, coinciding with Donald Trump’s presidential inauguration. Paul Atkins, a pro-crypto candidate, is the frontrunner to replace Gensler, potentially steering the SEC toward a more favorable stance on crypto ETFs.

The SEC has played a pivotal role in the approval of Bitcoin and Ethereum ETFs, and while regulatory hurdles remain for other crypto assets, optimism is growing. A more accommodative SEC could pave the way for further crypto market development in the U.S. Buying Opportunities After a Market Shake Up_1

Buying Opportunities After a Market Shake Up_1

Technical Analysis

Bitcoin has retraced to $100,000, aligning with the 100-period moving average on the 4-hour chart. Historically, this level has acted as a support zone during the bullish trend, offering investors opportunities to accumulate. The retracement also approaches the 0.50 Fibonacci level from the $90,600 low on November 26 to the $108,350 high. Meanwhile, the 200-period moving average coincides with the 0.618 Fibonacci retracement, highlighting a critical area for potential reversals.

The Relative Strength Index (RSI) has dipped to 33, showing divergence and signaling waning selling pressure. If Bitcoin finds support in this zone, a renewed bullish push could emerge. Traders should monitor these levels closely, as they may provide the foundation for a recovery.

Trading Recommendations

Trading direction: Buy

Entry price: 100000

Target price: 1100000

Stop loss: 95000

Validity: Dec 27, 2024 15:00:00

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

USD/JPY is trading around 153.75, down slightly from a recent high of 154.50 as markets await the outcome of the FOMC meeting. The Fed is expected to cut interest rates by another 25 basis points, but the market's focus is on signals on monetary policy in 2025 from Chairman Jerome Powell...

SELL USDJPY

Close Time

CLOSED

153.750

Entry Price

153.200

154.100

156.302 -1.112 -0.71%

35.0

Pips

Loss

153.200

154.108

Exit Price

153.750

Entry Price

154.100

As of December 19, 2024, USD/JPY is trading around 153.75, down from a weekly high of 154.50. The FOMC meeting is underway and the Fed is expected to cut interest rates by another 25 basis points, bringing them to a range of 4.25%-4.50%. However, the market is not only focused on the decision to cut, but also on the signals from the "dot plot" and Chairman Jerome Powell's speech on the policy outlook for next year.

Meanwhile, the Japanese Yen received some support from expectations that the BoJ will keep monetary policy unchanged at its meeting tomorrow. However, the large interest rate differential between the US and Japan remains the main factor supporting USD/JPY in the medium term.

Market psychology

The current market sentiment reflects caution as investors await the outcome of both the Fed and the BoJ. The dollar remains supported by a sharp rise in US bond yields ahead of the FOMC meeting. The US 10-year bond yield has risen to its highest level this month, underpinning the greenback.

On the other hand, the Japanese Yen received some support from safe-haven demand as global equities adjusted ahead of the Fed’s announcement. However, selling pressure on the USD started to increase as investors bet on the possibility of the Fed signaling a more dovish tone on its rate-cutting cycle next year. Trading data on the M30 chart showed that selling pressure increased as the price tested the resistance zone at 154.00, reflecting that the market sentiment was tilted to the downside for USD/JPY.

Technical analysis

On the M30 chart, USD/JPY is hovering near the important support zone at 153.50 – this is the convergence zone of the middle Bollinger Bands and the MA50 line.

Price is currently hovering below the middle Bollinger Bands and is trending towards the lower band at the support level of 153.20.

The Stochastic indicator (5,3,3) has exited the overbought zone and is crossing below the signal line, signaling the possibility of further downward correction in the short term.

The price has broken the Ichimoku cloud and is below the MA50, confirming that the downtrend is still dominant.

If the price breaks the support at 153.50, the next target will be the strong support zone at 153.20 – where the lower Bollinger Bands converge.

Trading Recommendations

Based on technical and fundamental analysis:

Entry: Sell at current levels around 153.75 or when price retests resistance at 154.00.

Take Profit: Set profit target at nearest support zone at 153.20 or deeper at 152.80 if selling pressure increases.

Stop Loss: Place stop loss above the key resistance level at 154.10 to protect capital in case price breaks to the upside.

Overall, USD/JPY is under pressure to correct lower ahead of the FOMC meeting results and expectations that the Fed will signal a more dovish rate cut cycle next year. If the exchange rate breaks key support levels such as 153.50 and 153.20, the downtrend could continue in the short term.

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The pair is showing signs of a slight recovery due to expectations of a technical correction ahead of the US Federal Reserve (Fed) meeting. In the coming time, the trend of EUR/USD will depend on the results of the Fed meeting and signals from the ECB...

BUY EURUSD

Close Time

CLOSED

1.04715

Entry Price

1.05300

1.04600

1.04249 +0.00643 +0.62%

11.5

Pips

Loss

1.04600

1.04586

Exit Price

1.04715

Entry Price

1.05300

On December 19, 2024, the EUR/USD exchange rate was trading around 1.0485, down nearly 0.3% from the beginning of the week. The USD continued to maintain its strength on expectations that the Fed will maintain its hawkish stance at its upcoming monetary policy meeting. The Fed is expected to cut interest rates by another 25 basis points to 4.25%-4.50%, but investors are concerned that the Fed may send a cautious message about the economic outlook for 2025.

Meanwhile, the euro has been under pressure from the ECB’s loose monetary policy. The ECB has cut interest rates by a total of 100 basis points this year and is expected to continue its rate-cutting cycle into 2025 to support the eurozone’s economic growth, which is weakening due to weak domestic demand and political instability in Germany.

Market psychology

The current market sentiment reflects caution as investors await the outcome of the Fed meeting later this evening. The US dollar remains supported by safe-haven flows amid the outlook for US economic growth that is outperforming the Eurozone. The DXY (Dollar Index) is currently trading near its monthly high of 107.00, indicating strength in the greenback.

On the other hand, the EUR was pressured by weak economic indicators in the Eurozone. Manufacturing PMI data for December showed that manufacturing activity continued to contract, with the index coming in at 46.2, below expectations of 47.0. This further reinforced expectations that the ECB will maintain its easing stance for longer.

Technical analysis

Will EUR/USD Recover From 1.048 Support Level_1

On the H1 chart, EUR/USD is hovering near strong support at 1.0485 – an important Fibonacci retracement level and last month's bottom.

The price is currently below the Ichimoku cloud, confirming that the downtrend is still dominant in the short term. However, if the price breaks above the resistance zone at 1.0510 (middle Bollinger Bands), a bullish reversal signal may appear.

The price is hovering near the lower Bollinger Bands, indicating a possible short-term technical recovery. The Stochastic indicator (5,3,3) has exited the oversold zone and crossed above the signal line, signaling a possible short-term price increase.

If the rate holds above the support at 1.0485 and breaks above the resistance at 1.0510, the next target will be the strong resistance at 1.0530 – where the MA50 on the H1 timeframe converges.

Trading Recommendations

Based on technical and fundamental analysis:

Entry: Buy at current levels around 1.0485 or when price retests this strong support zone.

Take Profit: Set profit target at nearest resistance zone at 1.0530 or higher at 1.0575 if bullish momentum is strong.

Stop Loss: Place stop loss below the important support level at 1.0460 to protect capital in case price breaks down.

Overall, EUR/USD is currently at a key support level with the potential for a short-term recovery if it holds above 1.0485. However, the market still faces many unpredictable fluctuations ahead of tonight's Fed meeting and signals from the ECB in the coming days.

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Central Bank

Summary:

Gold remained largely unchanged on Wednesday after rebounding from a one-week low yesterday. As the market prepares for the outcome of the final Federal Reserve meeting of the year, gold continues to adopt a defensive stance.

BUY XAUUSD

Close Time

CLOSED

2609.94

Entry Price

2706.00

2590.00

2623.41 +28.97 +1.12%

199.4

Pips

Loss

2590.00

2589.99

Exit Price

2609.94

Entry Price

2706.00

Fundamentals

Gold prices hovered below US$2,650 on Wednesday without a clear direction, as investors remained cautious, adjusting their positions in anticipation of the volatility that may arise from the Fed's interest rate decision later today. The market primarily expects a 25 basis point rate cut; however, there is significant uncertainty surrounding the Fed's monetary policy trajectory for 2025, which will be a focus of today's announcement.

Data released on Tuesday indicated robust retail sales for November, rising by 0.7%, sparking discussions among investors about the possibility of the Fed slowing the pace of rate cuts. The surge in retail sales is viewed as a positive inflationary factor that could influence the Fed's accommodative monetary policy.

A slowdown in rate cuts could be detrimental to gold, as lower interest rates typically reduce the opportunity cost of holding non-yielding assets, diminishing their appeal. Nevertheless, investors should await the Fed's statement, which may diverge from current market speculation.

Since the beginning of this year, gold prices have appreciated by over 28%, poised to achieve the highest annual increase since 2010 by the end of 2024.

Bullish Structure Remains While Market Could Experience Further Declines_1

Technical Analysis

Technically, the outlook for gold has not entirely turned bearish, as it continues to exhibit a series of higher highs and higher lows.

However, since reaching a peak of US$2,790 at the end of October, gold has failed to establish new highs, indicating that the bullish momentum prevalent in previous months has dissipated; this has resulted in a market characterized by both long and short positions until a clearer direction emerges.

Given that last week's critical resistance was in the US$2,710-US$2,725 range, one could argue that the path of least resistance in the short term is downward. However, the current downward momentum has not fully materialized, and the presence of a series of higher lows suggests that a partial rebound may have already commenced.

If gold prices indeed break below the support level of US$2,645, they may decline towards US$2,600, potentially resulting in liquidity falling below the recent temporary low of US$2,613.

The US$2,600 level represents a bullish trend line that has been in place since the summer. A break of this level would shift focus to US$2,580, which must be defended to prevent a drop towards the US$2,500 threshold.

In terms of resistance levels, the US$2,710-US$2,725 range is the most critical range, as gold has failed to break through this range twice, leading to sell-offs. Given that gold prices have remained below this level for the last two days of the previous week, it is unlikely we will see a retest of this level unless prices first undergo a slightly deeper correction towards the aforementioned levels. Therefore, the more significant resistance to monitor is around US$2,675, which corresponds to the low of the bearish engulfing pattern formed on Thursday.

Trading Recommendations

Trading Direction: Buy

Entry Price: 2610

Target Price: 2706

Stop Loss: 2590

Valid until: January 2, 2025 23:55:00

Support: 2645, 2632, 2629

Resistance: 2645, 2658, 2664

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

During the European session on Wednesday, the EURUSD is consolidating around the 1.0500 level. Given that traders are exercising caution and refraining from making new bets ahead of the Federal Reserve's policy announcement, the potential for further appreciation of the EURUSD remains constrained.

BUY EURUSD

EXP

TRADING

1.04345

Entry Price

1.07050

1.03300

1.04249 +0.00643 +0.62%

0.0

Pips

Flat

1.03300

Exit Price

1.04345

Entry Price

1.07050

Fundamentals

The final determination of the Eurozone's overall inflation rate for November stands at a YoY increase of 2.2%, up from 2.0% in October. Concurrently, the core Consumer Price Index (CPI), which excludes food, alcohol, and tobacco, has decreased to 2.7%, down from 2.9% in October.

The services sector has made the most significant contribution to the eurozone's annual inflation rate, accounting for +1.74 percentage points, followed by food, alcohol, and tobacco (+0.53 percentage points) and non-energy industrial goods (+0.17 percentage points). On the other hand, the energy sector has detracted -0.19 percentage points, reflecting subdued demand and declining energy prices.

The overall inflation rate for the European Union has been finalized at a YoY rate of 2.5%. Among member states, Ireland recorded the lowest annual inflation rate at 0.5%, followed by Lithuania and Luxembourg, both at 1.1%. In contrast, Romania has the highest inflation rate at 5.4%, followed by Belgium (4.8%) and Croatia (4.0%). Compared to October, four EU member states experienced a decrease in inflation rates, three maintained their rates, while twenty member states saw an increase in inflation.

European Central Bank (ECB) Governing Council member Rehn stated on Tuesday that the inflation rate in the eurozone has stabilized significantly at the ECB's target of 2%, which lays the groundwork for further interest rate cuts. "The direction of our monetary policy is now clear, and the pace and magnitude of rate reductions will be determined at each meeting based on the data received and comprehensive analysis."

He added that uncertainties surrounding trade policy are exerting pressure on the near-term economic outlook, with risks skewed to the downside, but Europe must be prepared to confront trade conflicts with the U.S.

Rehn remarked, "Negotiation is preferable; if the U.S. threatens Europe with higher tariffs, the EU can proactively signal its readiness to implement countermeasures, thereby strengthening its negotiating position."

Traders anticipate that the ECB will lower interest rates at each meeting until June 2025. Officials are acutely aware of the increasing economic risks in the eurozone and believe that price pressures will persist in returning to the ECB's target level next year.

Maintaining a Meeting-by-meeting Decision-making Approach Is a Prudent Strategy_1

Technical Analysis

The EURUSD continued to consolidate within the trading range of 1.0450 to 1.0600 on Wednesday, with the 20-day SMA appearing to be a significant barrier to overcome.

Technically, the Relative Strength Index has turned upward below the neutral level of 50, while the MACD is moving sideways at the zero line, indicating a lack of direction. Both indicators confirm that the market is experiencing a correction to the uptrend. A break of the critical level at 1.0412 could lead to a retest of the two-year low at 1.0330, followed by the low of 1.0220 from November 2022.

On the other hand, for bulls to maintain upward momentum, a breakout above the 20-day SMA at 1.0520 is necessary. A decisive break and sustained hold above this level would pave the way for a retest of the significant 1.0600 threshold. A breakout from this range would facilitate further upward movement.

Overall, the EURUSD has been trading within a narrow range since mid-November, and the current risk outlook is negative, though not severe. Attention should be paid to the support strength at the 1.0421 level.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.0435

Target Price: 1.0705

Stop Loss: 1.0330

Valid until: January 2, 2025 23:55:00

Support: 1.0453, 1.0412, 1.0330

Resistance: 1.0520, 1.0538, 1.0610

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

On Wednesday in Europe, the U.S. Dollar Index (USDX) is exhibiting a moderate downward trend around 106.85. Market speculation regarding a more cautious stance from the Federal Reserve on interest rate cuts may provide some support for U.S. Treasury yields and the U.S. dollar.

SELL USDX

Close Time

CLOSED

107.390

Entry Price

104.600

108.100

107.570 -0.540 -0.50%

71.0

Pips

Loss

104.600

108.100

Exit Price

107.390

Entry Price

108.100

Fundamentals

The focus today is the FOMC interest rate decision, with the market widely anticipating a 25 basis point cut, bringing the federal funds rate down to a range of 4.25-4.50%. The likelihood of any alternative outcome appears negligible, thus all attention is directed towards the statements from Federal Reserve Chairman Powell and the latest economic forecasts. It is expected that the Fed will signal a slowdown in the pace of easing by 2025, aligning with signs of economic recovery and persistent inflation.

Today's new projections raise three critical questions.

First, there is concern regarding the potential for a pause in rate hikes in January. The market assigns an 84% probability to the likelihood of no change in rates at the next meeting, and any voting discrepancies within the FOMC may indicate how far policymakers are from pausing the easing cycle.

Second, attention will shift towards the easing trajectory anticipated for 2025. The Fed's previous forecasts and dot plot indicate that the median interest rate is expected to reach 3.4% by the end of next year. Currently, the market estimates a 33% probability that rates will decline to a range of 3.75-4.00% by December 2025. A significant upward revision in the Fed's median forecast would reflect a sustained cautious stance on inflation, aligning with a more contractionary monetary policy than previously anticipated.

Third, the neutral interest rate will undergo rigorous scrutiny. Earlier projections for long-term rates were set at 2.9%, slightly above the 2.8% forecast from June. Approaching or exceeding the 3% mark could carry substantial psychological implications, suggesting that baseline expectations for economic growth and inflation stability in a post-tightening policy environment would be elevated.

From a market reaction perspective, a "hawkish rate cut" from the Fed could simultaneously boost the 10-year Treasury yield and the USDX. However, today's decision alone may not suffice to break through the current trading range.

For the USDX, it is essential to surpass the resistance level of 108.07 to confirm potential bullish momentum, which may require the 10-year yield to exceed 4.505%. These breakthroughs could hinge on the clarity of the new government's fiscal and trade policies.

Trading Recommendations

Due to market expectations that U.S. interest rates will remain elevated, the U.S. dollar maintains an overall bullish momentum on the daily chart, contributing to a more optimistic outlook. Meanwhile, in shorter time frames, bulls are exerting pressure towards a recovery peak.

However, given that the time frames remain excessively "crowded," the market will encounter significant resistance in its ascent, with 107.50 serving as a formidable barrier that bulls are likely to struggle to surpass.

Trading Recommendations

Trading Direction: Sell

Entry Price: 107.39

Target Price: 104.60

Stop Loss: 108.10

Valid until: January 2, 2025 23:55:00

Support: 106.32, 106.00, 105.75, 105.37

Resistance: 106.86, 107.02, 107.41, 108.00

Risk Warnings and Disclaimers

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BoJ’s Stance Keeps USD/JPY Elevated

Technical Analysis

Buying Opportunities After a Market Shake Up

Technical Analysis

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Will EUR/USD Recover From 1.048 Support?

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Bullish Structure Remains While Market Could Experience Further Declines

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Maintaining a Meeting-by-meeting Decision-making Approach Is a Prudent Strategy

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Risk Disclosure