What’s next? – USDJPY 16.01.18

The dollar was trading 0.35 percent higher vs the Japanese yen at 110.91 as of 05:40 GMT on Tuesday, with the American currency moving deeper to the downside.

Ahead in the day, the US data front remains quite thin, with only the NY Empire State manufacturing index scheduled at 13:30 GMT.

However, trading volumes are expected to rise as Wall Street opens after a long weekend. US financial markets were closed on Monday in observance the Martin Luther King’s Day holiday.

The US dollar index, which measures the greenback against six major currencies, was trading 0.52 percent lower at 90.26 by the time of this writing.

The American currency remains under pressure after last week’s inflation data boosted expectations that the Federal Reserve could face problems rising rates in the near future.

The US regulator has anticipated three interest rate hikes in 2018, keeping the same pace saw in the previous year. Another issue that could impact their policy decisions is the implementation of the Republican-backed tax reform, which is expected to expand the fiscal deficit.

From a technical perspective, the pair seems to be heading to 119.00 and below. Downward pressure is likely to continue in the middle-term, which means a penetration of the 119 mark is possible, opening the way to 118.5.

Fort Financial Services