The USD/JPY pair scales higher for the fifth successive day on Wednesday and climbs to over a two-week high during the early European session. Spot prices currently trade around the 137.00 round-figure mark, which bulls are now awaiting a move beyond a technically significant 200-day Simple Moving Average (SMA) before placing fresh bets.
The US Dollar (USD) continues to draw support from the recent hawkish remarks by several Federal Reserve (Fed) officials and climbs to a nearly two-month high, which, in turn, is seen as a critical factor acting as a tailwind for the USD/JPY pair. On Tuesday, Cleveland Fed President Loretta Mester said that interest rates are not at a sufficiently restrictive level and that the central bank isn’t at the spot to hold rates yet. This, in turn, reaffirms market expectations that the US central bank will keep interest rates higher for longer and provides a goodish lift to the Greenback.
On the other hand, the Japanese Yen (JPY) is weighed down by a more dovish stance adopted by the Bank of Japan (BoJ). It is worth recalling that BoJ Governor Kazuo Ueda said last week that it was too early to discuss specific plans to exit the massive stimulus program. This and a modest uptick in the US equity futures undermine the JPY’s safe-haven status and support the USD/JPY pair’s ongoing positive move. A modest downtick in the US Treasury bond yields might keep bulls from placing aggressive bets.
Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is to the upside. Hence, a subsequent strength towards retesting the monthly swing high, near the 137.75-137.80 region, looks like a distinct possibility. Some follow-through buying beyond the YTD peak, around the 137.90 area touched in March, will mark a fresh bullish breakout and pave the way for a further appreciating move. Traders now look to the US housing market data – Building Permits and Housing Starts – for a fresh impetus.
This Post Has One Comment
I like this weblog very much, Its a really nice office to read and receive info.Blog monetyze