Today’s CPI data out of the US is expected to confirm the absence of inflationary pressures. The US Fed will meet next week and markets expect a 25 basis point interest rate cut to be delivered. President Trump has stepped up his attacks on the Fed, led by Powell whom he appointed as Fed Chief, and suggested the Fed should consider negative interest rates. He further pointed out that the US should rebalance its debt load which is above 100% of GDP. Can the US Dollar handle a more dovish central bank and how will this impact the USDJPY? Today’s fundamental analysis will explore price action in both directions.

Economic data out of Japan was mixed with machine order contracting together with the Domestic Corporate Goods Price Index, but the Tertiary Industry Index surprised to the upside. Trade rhetoric between the US and China has eased over the past few days as both sides prepare for the next round of trade talks in October. This has resulted in a sell-off in the Japanese Yen which pushed the USDJPY into extreme overbought conditions. Is a price action reversal on the horizon? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month in profits.