Market Analysis – USDJPY
The USDJPY continues to decline during the first half of today’s trading, currently trading at 109.650. The asset over the previous 24 hours has been restricted in a price range, this is also due to a lack of momentum in the earlier part of the week as Easter normally results in a lower level of volatility and market participants. During the past 10 hours, we have managed to see a steady direction form with medium levels of volatility. We can clearly see three bearish candlesticks while the asset attempts to break below the lower range level of 109.577. Traders will continue to monitor the performance of the Treasury Yields following the release of the Federal Minutes, as the poor performing Bond market has strained the movement of the US Dollar.
Yesterday the publication of the US Federal Reserve’s Meeting Minutes was at the center of attention of American investors. Last month, the regulator left the rate unchanged at 0.25% and announced the preservation of the current monetary policy until at least 2024. However, market participants hope that the recovery of the American and world economies, accompanied by the acceleration of inflation, will force the regulator to start raising interest rates earlier than this date. Though, the regulator stood firm on the previous statements, but did mention their evaluation has advised a higher level of growth in 2023. They advised easing of the monetary policy will remain intact for as long as is required for both the employment and inflation levels to reach previous figures. The Central Bank strongly advised they will not alter the policy simply based on predictions or on one time figures. The figures will need to not only be healthy, but stable. Though it is likely Investors will continue to look for hints on the timing of tightening monetary policy in future reports of the Federal meeting.
Yesterday, President Joe Biden called on state authorities to open vaccination centers for all adult citizens throughout the country until April 19. There are currently about 150 million coronavirus vaccinated in the United States. The United States have advised they will also be closely monitoring the developments surrounding the Astrazeneca Vaccine after reports from various Medical Boards from around the globe, such as in the EU and Canada, regarding blood clots amongst certain blood types.
The Japanese Yen is under pressure due to a serious increase in the incidence of coronavirus in Osaka Prefecture. Experts believe the strain found here is extremely contagious and could lead to a new wave of epidemics across the country less than four months before the Olympic Games. Currently, the authorities of Osaka and neighboring prefectures are introducing quarantine measures, in particular, the Olympic torch relay has been canceled in the region. Despite all the coronavirus concerns, confidence in the economic outlook of Japanese households continues to grow. According to the latest data from the Bank of Japan, the share of households expecting an increase in inflation this year rose from 60.0% to 62.4%, and the indicator of household confidence rose from –23.1 to –8.5 points.
There is also technical influence over the current movement as the asset has massively increased over the past 3 months from 102.590 to almost 111.000. The movement measures over an 8% increase in the exchange rate in a short period of time. It is likely many traders would have, or would be looking to cash in profits based on the movement. This week is the first week of price action against the US Dollar since the bullish momentum built. The movement today continues to move against the US Dollar as does the movement on the US Dollar Index. Looking at the Japanese Yen Index we can see some slight positive movement, though it should be noted the price is still moving below the 30 day average price movement on all larger time frames.