Will Yen get back in range?

Andria Pichidi HFM

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 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 to the spring of next year. The central bank also stated it will expand eligible collateral and consider the introduction of an Exchange-Traded Fund (EFT) lending facility, that would allow to temporarily lend EFTs 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 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.

Author

Andria Pichidi

HFM

Having completed her five-year-long studies in the UK, Andria Pichidi has been awarded a BSc in Mathematics and Physics from the University of Bath and a MSc degree in Mathematics, while she holds a postgraduate diploma (PGdip) in

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