USD/JPY rate targets yearly high

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The exchange rate is looking at the current pace to challenge the yearly peak (139.39) after breaking above the starting range for August as USD/JPY rises for five straight days while continuing the series of highs and lows of the week. As it heads towards a new monthly high (137.65), USD/JPY is mostly tracking the rise in US Treasury yields. Additionally, the currency pair looks set to follow the upward slope of the fifty-day SMA (135.55) as it retraces to just above the moving average.

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In light of this, if USD/JPY can break above the yearly high (139.39), it could attempt to verify the September 1998 high. Bank of Japan (BoJ) could help support the exchange rate in the coming months as President Jerome Powell and Co. adopts a restrictive policy. The fundamental Personal Consumption Expenditure (PCE) price index, the Fed’s preferred gauge of inflation, is expected to decline to 4.7% in July from 4.8% a year earlier, which should have an impact on the USD/JPY. Evidence of easing price pressure could limit the greenback’s recent strength as it inspires the FOMC to change its strategy to counter inflation.

To accomplish a soft landing for the US economic system, the FOMC could price in relatively small rate hikes over the next few months. It’s unclear, however, whether the advisory board will change the forward advice in the next exchange rate judgment on September 21, when the central bank is expected to continue updating the Summary of Economic Projections (SEP). .

Given that traders have been net short on the pair for most of the year, USD/JPY could follow the bullish curve of the fifty-day SMA (135.51) as it climbs back just above – above the moving average in the interval.

According to GI According to the client sentiment survey, 30.42% of investors are now net longs of USD/JPY, with a short-to-long trading ratio of 2.29 to 1.

Net-short investors, on the other hand, are 5.46% higher than yesterday and 24.31% higher than the previous week. The number of traders who are net long is 6.62% higher than yesterday and 0.57% lower than the previous week. While the rise in net-short interest has boosted crowd behavior, the drop in net-long position coincides with USD/JPY trading at a new monthly high (137.65). The previous week, 31.52% of investors were net-long on the pair.

The exchange rate may attempt to challenge the yearly high (139.39) as it settles the starting range for August, and the latest price behavior has increased the potential for further USD/JPY upside as it continues the week’s trend of stronger peaks and valleys.

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