USD/JPY: Dollar remains under modest pressure

Did the Fed Chair say anything dovish? No. Was he super hawkish? Again, no.


The reaction to Jay Powell’s speech on Tuesday was a positive one for risk assets, which meant that the dollar would come under pressure given its general negative correlation with stocks. Did the Fed Chair say anything dovish? No. Was he super hawkish? Again, no. He was deemed neutral overall. Powell acknowledged that the disinflationary process is underway, but also suggested that interest rates may have to be pushed even higher if jobs data continues to show upside surprises. So, the dollar may yet make a comeback. One thing is for sure, it will be pretty volatile around key data releases moving forward, as investors speculate on the Fed’s next move.

Unfortunately, the economic calendar is quite quiet today, but the Fed’s Williams and Waller will be speaking later.

Among the dollar pairs to watch today is the USD/JPY, as speculation continues over who will replace Bank of Japan Governor Kuroda. The USD/JPY is also testing a very important technical level around 130.50 to 131.00, the base of the recent breakout.

If the dollar bulls want to take control back then they will need to step in right about now, around these levels. Otherwise, last week’s breakout would be regarded as a failed breakout, and thus lead to more technical selling in the days ahead. A move back above the high made in Asia overnight circa 131.35/40 could ignite fresh technical buying towards last week’s high and potential beyond.



Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account