Short-term and medium-term outlook for the dollar and yen
✔️ Short-term dollar-yen outlook
1. Bank of Japan monetary policy meeting
As the July monetary policy meeting is approaching, the market is watching whether the Bank of Japan will raise additional interest rates. Taken together in each article, 33% anticipates additional interest rate increases, and there is a possibility that this forecast will have an impact on the dollar-yen exchange rate. If additional interest rate increases are announced, the trend of yen appreciation and depreciation of the dollar will intensify in the short term.
2. US Economic Indicators and Fed Trends
US economic indicators and Fed policy trends are also important. If US inflation remains high, there is a high possibility that the Fed will continue its tightening policy, and this will be a factor in the strengthening of the dollar. For example, depending on US employment statistics and consumer price index (CPI) results, there is a possibility that the dollar-yen exchange rate will fluctuate drastically. (*Technical analysis will be streamed live)
3. Market risk factors
Geopolitical risks and changes in the international situation also have an impact on the short-term dollar to yen exchange rate. For example, the worsening relationship between China and the United States and political unease in Europe have strengthened the risk aversion attitude in the market, and there is a tendency for yen to be bought.
✔️ Mid-term dollar-yen outlook
1. Changes in the Bank of Japan's policy stance
If the Bank of Japan confirms wage increases and inflation continues and implements continuous interest rate increases or monetary tightening, there is a possibility that a trend of appreciation of the yen will form in the medium term. In particular, when wage increases (real wages are falling) continue and achieving price stability targets is in view, the Bank of Japan's monetary policy will shift in the direction of tightening.
2. The sustainability of the US economy
The sustainability of the US economy will also have a big impact on the medium term dollar to yen exchange rate. If the Fed succeeds in controlling inflation and economic growth stabilizes, there is a possibility that the strong dollar trend will continue. Meanwhile, if the US economy decelerates and the Fed turns to cutting interest rates, it will cause the dollar to depreciate, leading to an appreciation of the yen.
3. Linkage of the global economy
Trends in the global economy also have an impact on the medium term dollar to yen exchange rate. In particular, the recovery of the Chinese economy and economic trends in Europe are important. As the linkage of the global economy increases, it is expected that the relative strength and weakness of the Japanese economy will be reflected in exchange rates.
✔️ Proposal of investment strategies
1. For short term traders
It is important to closely monitor market movements before and after the Bank of Japan's monetary policy meeting and the announcement of key US economic indicators, and adjust positions. In particular, in situations where volatility increases, it is recommended that risk management be thorough and loss cuts are set appropriately.
2. For mid-term investors
It is important to build a medium-term position while determining trends in the global economy, centering on policy trends of the Bank of Japan and the Federal Reserve. In particular, determining the sustainability of wage trends and inflation rates is key. Also, as a hedging strategy, one method is to consider a yen buying position when risk is off. (*Specific explanations will be given live)
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