Will Yen get back in range?

The Dollar has consolidated after running higher yesterday.

The narrow trade-weighted USD index settled under the 22-month high printed at 98.19, while EURUSD concurrently settled around 1.1135 on EU open, below the 22-month low seen yesterday at 1.1140.

USDJPY retreated back under 112.00 after yesterday running to a 4-month high at 112.40. The peak was product of broad run higher in the Dollar, which has benefited from recent firm data out of the US. Stock markets, especially in Asia, have continued to sputter, which seem to given the Yen a safe-haven bid today, helping USDJPY to correct.

The BoJ’s announcement and statement today had little impact on the Yen. The BoJ left rates unchanged, but clarified its forward guidance, saying it will keep rates very low at least through spring of next year. The central bank also stated it will expand eligible collateral and consider the introduction of an Exchange-Traded Fund (ETF) lending facility, that would allow to temporarily lend ETFs that the Bank holds to market participants.

As stated above, USDJPY drifted below 112.00, to 111.73, after the announcement, as there was a position trimming ahead of Japan’s golden week holiday break. The Golden Week starts at the end of this week. Despite this decline the asset holds within the 111.64-112.15 range.

However, as long as 111.64 Support holds and as 4-hour, daily and weekly momentum indicators have flattened around/close to neutral zone, the USDJPY is expected to remain within  3-week range.

In the hourly chart meanwhile, the asset rebounded from S1 of the day and it is currently moving to the upside. Meanwhile, today we expected US durable goods to rise. This could add further strength on Dollar and could lift USDJPY higher.

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Andria Pichidi

Market Analyst

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