USD/JPY extends losses to levels near 146.00

• The dollar dives below 147.00 and approaches 146.00.
• Hopes of a Fed pivot have sent the US dollar tumbling.
• USD/CHF to consolidate between 144.00 and 152.00 – UOB.

The US dollar depreciated for the second consecutive day on Wednesday, breaking below 147.00 to reach levels right above 146.00, the area where the pair bottomed after the suspected BoJ interventions.  

Fed pivot expectations are hurting the greenback

The greenback continues depreciating across the board, weighed by increasing expectations that the Federal Reserve might be contemplating slowing down its tightening pace over the next months.

The market is still pricing a 75 basis point hike next week, but the odds for December have been downgraded to a 0.50% rate hike. The mounting evidence that the aggressive tightening cycle is starting to bite into economic growth is adding pressure on the central bank to soften the monetary normalization plan.

US Treasury bonds retreated further on Wednesday. The 10-year yield has reached the 4.00% area, from 4.25% at the beginning of the week, which added negative pressure on the US dollar.

USD/JPY: Downside, contained at 144.00 – UOB

FX analysts at UOB maintain the consolidative view on the pair, with downside attempts limited at 144.00: “We continue to hold the same view as yesterday (25 Oct, spot at 148.80). As highlighted, the recent volatile price actions have resulted in a mixed outlook. Further volatility is not ruled out and USD could trade within a wide range of 144.00/152.00 for the time being.”

Technical levels to watch