How do you trade the Fed-BoJ rate gap?

FTC Community TeamStaff99 views

The gap between US and Japanese rates is wide again, and it drives USD/JPY's carry appeal — with intervention as the counterweight. The pair is a tug-of-war between two forces.

How do you trade the Fed-BoJ rate gap? — support and resistance diagram
Price bouncing between support and resistance

What's your approach?

  • how you weigh carry against intervention risk
  • the levels or signals you watch
  • whether you prefer yen crosses to USD/JPY
How do you trade the Fed-BoJ rate gap? — central bank rate path diagram
A central bank's policy rate path across recent meetings

Background: carry trade and intervention.

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