Review of currency pairs Dollar-Yen (USDJPY) and Euro-Dollar (EURUSD) on Forex

Dollar-Yen (USDJPY)

The Japanese yen could strengthen against the dollar if signs of weakness in the US economy allow the Federal Reserve to cut interest rates in September and December. “This result will ease some upward pressure on USD/JPY, especially if the Bank of Japan coincidentally raises rates again this year,” Rabobank FX strategist Jane Foley said in a note. She points to speculation that the Bank of Japan may be inclined to raise rates or reduce bond purchases at a faster pace than previously expected. USD/JPY could fall to 152.00 in a month (from current level of 156.209) if the market interprets the message from the June meeting as indicating future policy tightening, and it could reach 145,000 in 12 months, she said.

Euro-Dollar (EURUSD)

The euro rose against the weaker U.S. dollar and rose against some other major currencies after trade and current account surpluses widened in March and labor costs rose at an accelerated pace in the latest quarter.

The euro dollar was 0.09% higher at 1.0867, making the European single currency one of the best-performing major currencies along with the Norwegian and Swedish krona, after Eurostat said trade and current account surpluses widened in March.

Europe's trade surplus rose to 24.1 billion euros, up from 23.6 billion euros and ahead of the consensus increase of 19.9 billion euros. This comes after the current account surplus was reported to have risen to a seasonally adjusted 35.8 billion euros in March. This is up from 28.9 billion euros previously and exceeds the consensus increase of 30.2 billion euros.

More importantly, Eurostat's labor cost index is reported to have increased by 4.9% YoY in the fourth quarter of 2023, up from 3.4% previously, suggesting real growth in worker wages and could have a dampening effect on European Central Bank politicians. ' appetites for interest rate cuts after June.