As a result of recent interventions by the Treasury Department and a shift in the BOJ’s rhetoric, the Japanese yen tested multi month lows. Today, however, the market is reacting to a move away from risk with a sharp sell off in the yen, which is down as much as 0.6% against the dollar.
This is an important signal ahead of the upcoming FED and BOJ decisions. Such a rapid weakening of the currency suggests that the implied BOJ rate hike had already been priced in, and the market expects further steps if the BOJ wants to achieve a lasting stabilization of the exchange rate.
Beyond the decisions themselves, communication from the central banks and the further signaled or implied path of interest rates will be extremely important. Given the tense situation in the bond market and high oil prices, the only thing one can expect with a high degree of confidence is that elevated volatility in the currency pair will persist.
USDJPY technical analysis (D1)
The long term picture points to a consistent uptrend. The price shows a clear downside deviation from the regression line, and the RSI (14) is at oversold levels. Fibonacci levels indicate a narrow consolidation between roughly 163 and 153. Despite the interest rate differential and the long term trend, the risk of intervention by both the U.S. and the BOJ remains ongoing and real. Source: xStation5
Daily summary: AI slowdown does not slow the rise in yields
US OPEN: AI slows, oil rises, markets fall
Market Wrap: European Stocks in the Red. AI Sinks, Oil Surges
Oil back above $100
The material on this page does not constitute as financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other particular needs.
All the information provided, including opinions, market research, mathematical results and technical analyses published on the website or transmitted to you by other means is provided for information purposes only and should in no event be interpreted as an offer of, or solicitation for, a transaction in any financial instrument, nor should the information provided be construed as advice of legal or fiscal nature.
Any investment decisions you make shall be based exclusively on your level of understanding, investment objectives, financial situation or any other particular needs. Any decision to act on information published on the website or transmitted to you by other means is entirely at your own risk. You are solely responsible for such decisions.
If you are in doubt or are not sure that you understand a particular product, instrument, service, or transaction, you should seek professional or legal advice before trading.
Investing in OTC Derivatives carries a high degree of risk, as they are leveraged based products and often small movements in the market could lead to much larger movements in the value of your investment and this could work against you or for you. Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary, seek independent advice.