USDJPY Trading View
The United States Dollar Index is on a Bullish trend. This is good news for those that are long in this asset class. However, the US Dollar Index is a volatile market. There are times when a trader can get hit by Order-blocks. If this happens, it’s time to rethink your strategy and make adjustments.
Order-blocks are a dime a dozen in the Forex space. Big institutions like Morgan Stanley, the Bank of Tokyo-Mitsui and the Singaporean government have been staking out their own corner of the order-block market. The last two have been
known to place bets on the USDJPY. This explains the hefty spread between the Japanese yen and the American dollar, the latter of which has seen its fair share of price increases. It’s also worth noting that the Japanese economy is shrinking in both real and perceived terms, as the government tries to tame inflation. However, that doesn’t mean that there’s no love for the Dollar in particular.
While the cheapest pair of shoes, aka the US dollar, is in the doldrums, the Japanese yen has found some traction. In fact, its Yen to dollar ratio has dropped to one to the downside, as Japanese consumers have become more frugally minded. Having said that, the JPY has lost some of its luster recently, as manufacturing activity in Japan
sputtered in the aftermath of the global economic downturn. On the plus side, the Fed’s December FOMC meeting was a boon for the currency, as the Fed indicated it is comfortable with keeping interest rates low for the foreseeable future. Despite this, the JPY’s price has managed to eke out a modest gain, albeit not quite enough to sustain a full-fledged rally.
It’s not too difficult to find a broker that offers this currency pair, but for the best deals, be sure to check out the Interbank Foreign Exchange (ICE). Alternatively, you could use the INDEX. To keep your options open, take a look at the currency
summaries provided by each. Using the ICE as a starting point will also allow you to compare the Yen’s recent performance against its peers, including the euro and the British pound.
Despite the currency’s woes, there’s still time to pick up some of the yen’s prized
properties. The currency’s high liquidity and a plethora of exchanges make it a
popular choice for offshore funds looking to make a big splash.
One of the most popular pairs traded in the world, USDJPY has been on a bullish trend lately. It has reached new highs in the last few days and is looking to continue its upward momentum. The pair’s broader outlook is tilted to the downside, though. This is due to the widening yield gap between the US and Japan. As a result,
investors are focusing on purchasing dollar assets to take advantage of the higher borrowing costs.
However, the pair’s strength was weakened by two recent BoJ interventions. In addition, the Bank of Japan has been struggling to achieve its 2% inflation target. Moreover, the Bank of Japan has been under pressure from the Japanese
government to ease its price hikes. Despite its efforts, the yen has slid this year. Despite its losses, the USDJPY has been able to rise more than 3500 pips within a year. While the pair’s long-term trend has been in the negative, its momentum has
Today, the USDJPY is poised to break out of its long-term support area. It may also continue to push towards fresh monthly highs. On the other hand, the pair’s short term trading opportunities will depend on the broader market risk sentiment.
Traders will likely take cues from the usual Weekly Initial Jobless Claims data that is expected to be released early in the North American session.
If the US Dollar continues its path of growth against the yen, it will be a good time to enter into a long position in the pair. Alternatively, if the US Federal Reserve announces a series of rate hikes in the coming year, the demand for the USD will
only increase. Traders should stay alert and ready for extreme moves.
The US economy continued to add jobs in September. Meanwhile, the Fed raised
interest rates. This could encourage investors to purchase dollar assets, as the widening yield gap between the US dollar and the yen could push the yen to the upper end of its range. Additionally, a number of data releases from the US will have
an impact on the Fed’s policy outlook.
US retail sales, consumer inflation, and the FOMC’s policy meeting all play a role in
determining the short-term trading opportunities for the USD/JPY pair. A positive reaction to the FED’s latest update, as well as positive manufacturing and retail sales data, should boost the currency’s momentum. Furthermore, the release of the US NFP report on Friday will also have a significant impact.
Nevertheless, the USD/JPY pair has remained in a range for the past couple of weeks, and the Bank of Japan’s decision on interest rates will determine the next leg of the directional move. The Fed’s decision is expected to boost the dollar’s strength, while the BoJ’s intervention will remain a key factor in the currency’s movements.