Japanese Yen Tanks as US Dollar Soars Ahead of The Fed and BoJ. Where to for USD/JPY?


Crude Oil, US Dollar, USD/JPY, Hang Seng, Euro, AUD, NZD, CAD, Fed- Talking Points

  • The Japanese Yen continues to weaken across the board as USD strengthens
  • Equity markets are all under pressure as Chinese tech names face scrutiny
  • Commodity had a lull as all eyes are on the Fed. Will USD/JPY keep going?

The Japanese Yen made a 5-year low against the US Dollar today ahead of central bank meetings in both countries. While the Fed has 25 basis-points baked in, the Bank of Japan is expected to keep rates on hold.

Overnight, US headline CPI hit expectations coming in at 7.9% year-on-year to the end of February. It’s the highest reading since January 1982, further making the case for tighter monetary policy.

In a show of bipartisan support, the US Senate passed a US$ 1.5 trillion funding bill that avoids any government shutdown and provides 13.6 billion in aid to Ukraine.

Wall Street finished their day session slightly lower and APAC equities followed the lead with a sea of red across Asian indices.

Hong Kong’s Hang Seng tech index led the charge south, down almost 9% at one stage.

Concerns over regulatory issues are mounting as the Securities Exchange Commission (SEC) identified 5 Chinese tech companies that may face de-listing in the US if they do not meet regulatory standards.

In Asia today, the Euro recovered some of yesterday’s losses after the European Central Bank surprised markets with a hawkish tone at their meeting.

AUD, CAD and NZD joined the Yen lower as risk sentiment overwhelmed the commodity-based currencies.

Commodity markets have had a relatively quit day in Asia so far. WTI crude oil is near US$ 107 bbl and Brent is hovering around US$ 110 bbl at the time of writing. Gold is steady at US$ 1,986 an ounce.

There are a number of ECB speakers today and later on, Canada will see some jobs data. The US will get the University of Michigan sentiment survey.

The full economic calendar can be viewed here.

USDJPY Technical Analysis

Trading at a 5-year high, bullish momentum appears to be unfolding for USD/JPY. The short, medium and long-term simple moving averages (SMA) are all below the price and exhibiting positive gradients. This is illustrated by the 10, 55 and 100-day SMAs.

Support may lie at break point of 116.353 or the 10-day SMA, currently at 115.505.

On the topside, resistance could be the January 2017 high of 118.608 or the ascending trend-line below that, currently intersecting at 118.10.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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