USDJPY expects further declines as US Biden exercises the 14th amendment privilege

The USDJPY is projected to keep on decline below 137.50 due to the Fed’s dovish interest rate forecast.

In the Asian session, the USDJPY pair has retreated to within a few cents of the critical 137.50 support level. The asset is predicted to continue to lose value below the aforementioned support since the delay in raising. The US debt ceiling is upsetting international financial markets.

The S&P500 futures have somewhat recovered from the losses they suffered in early Asia, but the market is still in a risk-off mode since the US Treasury is getting closer by the day to defaulting. The current bipartisan agreement between US President Joe Biden and House of Representatives Kevin McCarthy was called off because it was deemed undesirable, and Biden pledged to stop Democrats from obtaining reelection in 2024.

In the event that Republicans maintain their present party control, US Biden may invoke his 14th Amendment authority.

In the event that Republicans continue to cling onto their existing political positions, the public anticipates that US Biden will invoke his 14th Amendment power. to avoid the US economy going into default, which would raise interest rates and cause extreme volatility in the financial markets. The White House is unsure if they have enough time to try the unproven solution, though.

To maintain inflation consistently above 2%, the BoJ will retain its dovish position on interest rate policy.

The US Dollar Index (DXY) is seeking support around 103.00, although the downside appears to be more favorable given that the Federal Reserve (Fed) is anticipated to maintain interest rates at their June monetary policy meeting. While attempting to breach over 3.7%, the 10-year US Treasury rates have been under some pressure.

An increase in inflationary pressures on the Japanese Yen front has indicated some signals that the country’s economic recovery is still intact. When compared to the previous report, the national headline Consumer Price Index (CPI) increased by 3.5%.

The market was expecting a slowdown of 2.5%, not 3.2%. Compared to the previous announcement of 3.8% and the consensus estimate of 3.4%, the core CPI, which excludes the cost of food and energy, increased to 4.1%. To keep inflation consistently above 2%, the Bank of Japan (BoJ) will continue to take a dovish position on interest rates.

USDJPY Technical levels