Daily digest market movers: Japanese Yen bulls seem non-committed despite reviving bets for an imminent BoJ pivot
- Data released on Tuesday showed that the Tokyo CPI rebounded from a 22-month low in February and revived talks that the Bank of Japan will soon exit the negative interest rates regime, boosting the Japanese Yen.
- Moreover, investors seem convinced that another bumper pay hike this year should allow the BoJ to end its ultra-loose policy settings in the coming months, which, along with the risk-off impulse, benefitted the JPY.
- The BoJ, however, is unlikely to rush into a rate hike and might wait until the June policy meeting before tightening, especially after two consecutive quarters of economic contraction, resulting in a technical recession.
- The US Dollar is undermined by Tuesday's disappointing release of the US ISM Services PMI, which showed that growth in the non-manufacturing sector slowed a bit in February amid a decline in employment.
- The markets, however, are still pricing in the possibility of the first interest rate cut by the Federal Reserve in June, which helps limit the downfall in the US Treasury bond yields and act as a tailwind for the buck.
- Traders also seem reluctant to place aggressive directional bets and look to Fed Chair Jerome Powell's congressional testimony for fresh cues about the rate-cut path, which should provide some impetus to the USD.
- Apart from this, Wednesday's release of the ADP report on private-sector employment and JOLTS Job Openings data should contribute to producing short-term trading opportunities around the USD/JPY pair.
- Data released on Tuesday showed that the Tokyo CPI rebounded from a 22-month low in February and revived talks that the Bank of Japan will soon exit the negative interest rates regime, boosting the Japanese Yen.
- Moreover, investors seem convinced that another bumper pay hike this year should allow the BoJ to end its ultra-loose policy settings in the coming months, which, along with the risk-off impulse, benefitted the JPY.
- The BoJ, however, is unlikely to rush into a rate hike and might wait until the June policy meeting before tightening, especially after two consecutive quarters of economic contraction, resulting in a technical recession.
- The US Dollar is undermined by Tuesday's disappointing release of the US ISM Services PMI, which showed that growth in the non-manufacturing sector slowed a bit in February amid a decline in employment.
- The markets, however, are still pricing in the possibility of the first interest rate cut by the Federal Reserve in June, which helps limit the downfall in the US Treasury bond yields and act as a tailwind for the buck.
- Traders also seem reluctant to place aggressive directional bets and look to Fed Chair Jerome Powell's congressional testimony for fresh cues about the rate-cut path, which should provide some impetus to the USD.
- Apart from this, Wednesday's release of the ADP report on private-sector employment and JOLTS Job Openings data should contribute to producing short-term trading opportunities around the USD/JPY pair.
Technical analysis: USD/JPY extends its consolidative price move in a multi-week-old range, downside potential seems limited
From a technical perspective, the USD/JPY pair has been oscillating in a familiar band over the past three weeks or so. Against the backdrop of a rally from the December swing low, this might still be categorized as a bullish consolidation phase and supports prospects for an eventual break to the upside. Moreover, oscillators on the daily chart are holding in the positive territory and validate the constructive outlook. That said, it will still be prudent to wait for acceptance above the 150.75-150.85 resistance zone, or the YTD peak touched in February, before positioning for any further appreciating move. Some follow-through buying beyond the 151.00 mark will reaffirm the positive bias and lift the USD/JPY pair to the 151.45 hurdle. The upward trajectory could extend further towards the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.
On the flip side, the overnight swing low, around the 149.70 area, could protect the immediate downside ahead of the 149.20 region, or last week's trough. This is followed by the 149.00 mark, which if broken decisively might shift the near-term bias in favour of bearish traders and prompt aggressive technical selling. The subsequent downfall could drag the USD/JPY pair to the 148.30 support en route to the 148.00 mark and the 100-day Simple Moving Average (SMA), currently pegged near the 147.75 region.
From a technical perspective, the USD/JPY pair has been oscillating in a familiar band over the past three weeks or so. Against the backdrop of a rally from the December swing low, this might still be categorized as a bullish consolidation phase and supports prospects for an eventual break to the upside. Moreover, oscillators on the daily chart are holding in the positive territory and validate the constructive outlook. That said, it will still be prudent to wait for acceptance above the 150.75-150.85 resistance zone, or the YTD peak touched in February, before positioning for any further appreciating move. Some follow-through buying beyond the 151.00 mark will reaffirm the positive bias and lift the USD/JPY pair to the 151.45 hurdle. The upward trajectory could extend further towards the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.
On the flip side, the overnight swing low, around the 149.70 area, could protect the immediate downside ahead of the 149.20 region, or last week's trough. This is followed by the 149.00 mark, which if broken decisively might shift the near-term bias in favour of bearish traders and prompt aggressive technical selling. The subsequent downfall could drag the USD/JPY pair to the 148.30 support en route to the 148.00 mark and the 100-day Simple Moving Average (SMA), currently pegged near the 147.75 region.
Japanese Yen price this week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Australian Dollar.
USD EUR GBP CAD AUD JPY NZD CHF USD -0.01% -0.23% 0.30% 0.48% -0.05% 0.47% 0.20% EUR 0.01% -0.25% 0.29% 0.48% -0.04% 0.48% 0.21% GBP 0.24% 0.24% 0.51% 0.72% 0.20% 0.69% 0.44% CAD -0.30% -0.27% -0.52% 0.19% -0.35% 0.18% -0.09% AUD -0.48% -0.49% -0.74% -0.17% -0.52% -0.01% -0.28% JPY 0.05% 0.03% -0.25% 0.31% 0.50% 0.48% 0.24% NZD -0.47% -0.48% -0.73% -0.19% 0.01% -0.53% -0.27% CHF -0.20% -0.21% -0.43% 0.10% 0.29% -0.25% 0.27%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.01% | -0.23% | 0.30% | 0.48% | -0.05% | 0.47% | 0.20% | |
| EUR | 0.01% | -0.25% | 0.29% | 0.48% | -0.04% | 0.48% | 0.21% | |
| GBP | 0.24% | 0.24% | 0.51% | 0.72% | 0.20% | 0.69% | 0.44% | |
| CAD | -0.30% | -0.27% | -0.52% | 0.19% | -0.35% | 0.18% | -0.09% | |
| AUD | -0.48% | -0.49% | -0.74% | -0.17% | -0.52% | -0.01% | -0.28% | |
| JPY | 0.05% | 0.03% | -0.25% | 0.31% | 0.50% | 0.48% | 0.24% | |
| NZD | -0.47% | -0.48% | -0.73% | -0.19% | 0.01% | -0.53% | -0.27% | |
| CHF | -0.20% | -0.21% | -0.43% | 0.10% | 0.29% | -0.25% | 0.27% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
FOLLOWME Trading Community Website: https://www.followme.com
Hot
No comment on record. Start new comment.