Event to watch today:
15:15 EET. USD – ADP Employment Change
USDJPY:
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On February 4, USD/JPY is holding near 156.25: the dollar is steady, while the yen is weakening amid upcoming elections in Japan and discussions about additional fiscal stimulus. At the same time, the market remains mindful of the risk of currency intervention, so any statements from officials can quickly shift the balance of supply and demand.
In the U.S., sentiment is supported by a reassessment of rate expectations: participants have become more cautious about Federal Reserve rate-cut forecasts, which helps keep yields supported and sustains demand for dollar assets. In Japan, the Bank of Japan has not yet signaled an urgent policy tightening, and the difference in interest-rate conditions continues to weigh on the yen.
Next, the focus is on U.S. data and the news flow around Japan’s elections: strong U.S. economic readings keep the potential for further dollar strength. At the same time, the key risk for longs is abrupt steps by regulators to stabilize the exchange rate, which could trigger a sharp strengthening of the yen.
Trading recommendation: BUY 156.25, SL 156.00, TP 157.00
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