Market Analysis – USDJPY
The US Dollar is increasing against the Japanese Yen during today’s Asian session and declined the day before. Yesterday saw interesting movement amongst major currency pairs as the US Dollar started the day strong, but later largely decreased after speeches by the Chairman of the Central Bank. Against certain currencies the Dollar hit a two month low. Though the Yen still remains weak and the Dollar continues its attempt this morning in consolidating above the 109.000 level.
As mentioned above the instrument did actually make an attempt to grow and managed to update local highs since April 14 in the early part of yesterday. However, the published US Fed Meeting Minutes disappointed investors, after which a wave of US Dollar sales followed. The US regulator did not disclose its plans for a gradual tightening of monetary policy and chose to maintain the status quo, noting only the successes in the labor market. However, many analysts agree that it is not worth expecting a reduction in the quantitative easing program before the last few months of the year, or even possibly early 2022 as the chairman continues to hold his stance on both capital being pumped into the economy by the Central Bank as well as interest rates.
In addition to speeches by the Central Bank, the market also evaluated the speech, or the new President in terms of his future fiscal policy and also how the other parties reacted to the proposals. Biden noted that the economy has gained some 1.3 million new jobs in the first few months of his administration, more than any in the first 100 days of any presidency, but at the same time the market is aware the increase is not necessarily directly related to Biden. He quickly pivoted to the need to pass his American Jobs Plan if the country is going to sustain momentum and get back to the historic low levels of unemployment before the pandemic. The issue however comes with the proposed tax increases for the US’s elite class.
Yesterday’s March data on the volume of retail sales in Japan were positive. The indicator rose by 5.2% instead of the expected increase of 4.7%. It is the first increase in sales in the last four months. It was driven by wider growth in demand for clothing, accessories, and general goods. Experts believe that this recovery will be short-lived, and soon, the indicator will again be under pressure due to the new introduction of the state of emergency in several Japanese prefectures.
Today in the US’s Gross Domestic Product, the first 3 months of 2021 will be published, which is likely to support consumer interest in the US Dollar and is measured by economic calendars as having a high impact on the currency. Noteworthy data from Japan will appear on Friday when the April report on consumer inflation, as well as data on the dynamics of industrial production, and the unemployment rates for March will be released.
The US Dollar today is strengthening against some of its main competitors including the Swiss Franc, Euro, and Australian Dollar. Though it should be noted the increase is still very slight and the US Dollar Index remains below yesterday’s price range. The Yen is weakening against all main competitors including the Pound and the Euro. The Japanese Yen Index is declining this morning for the sixth consecutive day, but has reached a previous support level which was formed on the 2nd April up to the 23rd April 2021.
Resistance levels: 108.54, 109.00, 109.37, 109.84.
Support levels: 108.20, 107.78, 107.46, 107.00.