USD/JPY Rises As Hawkish Fed Resonates

  • USDJPY
    (${instrument.percentChange}%)

USD/JPY

The US Federal Reserve continues to beat its hawkish drum, with Chair Powell at the forefront. On his US Senate testimony on Tuesday he had hinted towards a faster tapering path and said it is probably a good time to "retire" the term "transitory", while yesterday he doubled down with his comments on the House of Representatives.

As such, the pair showed resilience on Wednesday risk-off wave, on news of the first confirmed case of Omicron in the United States. [1]

Risk seems to be at a better place today and recent Fed commentary boosts US treasury yields and the US Dollar, bringing USD/JPY at a critical technical conjuncture. The pair managed to defend 112.92-71 area from our latest analysis, as the Daily Ichimoku cloud provides support, rebounding from the poor start to the week.


Past Performance: Past Performance is not an indicator of future results.

Trade the News: View our Economic Calendar

This gives it the chance to take another crack at the EMA100 and the key 113.50-68 area, but a break above is needed, for the downward pressure to ease. Such a move will allow it to look to 113.92-114.00, but sustained improvement is likely needed for such a recovery.


Past Performance: Past Performance is not an indicator of future results.

Despite today's gains and the fact that it defended the aforementioned 112.92-71 level, Wednesday closed below 38.2% Fibonacci of the "August Low/November multi-year High" advance and the upper border of the Ichimoku cloud. Furthermore, uncertainty around Covid remains high and below the EMA100, the pair is in a precarious position. Given these factors, risk for a return towards last month lows (112.52) persists, but may be early to talk for a breach of 112.11.

Market participants will remain on the lookout for fresh Omicron news, while from the economic calendar US Jobless Claims stand out, ahead of Friday's Non-Farm Payrolls.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 04 Jul 2022 https://www.cdc.gov/media/releases/2021/s1201-omicron-variant.html

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}