The growing likelihood of error | 26 4月 2022

26 4月 2022, USD/JPY

The growing likelihood of error

USDJPY trading plan:

The concerns over the likelihood of 50-basis point rate hikes at the next two FOMC meetings is an overreaction. Approximately $150 billion in securities on the Fed’s balance sheet are maturing over the next few months, suggesting the central bank could still be purchasing up to $100 billion in bonds, essentially offsetting any impact from the interest rate moves. The market has concerns inflation is going to prompt Fed to tighten further and faster than traders stories are comfortable with and that it will have a negative effect on asset pricing. Markets are very uneasy about the growing likelihood of a policy error by the Federal Reserve. When a Fed official suggests a 50-basis points hike, markets immediately start trying to price in 75 basis point hikes. It's madness really.

Investment idea: buy 127.25 and take profit 128.00.

David Johnson
Analyst of «FreshForex» company
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