USD/JPY is now seen within 149.50-151.65 – UOB

Pablo Piovano FXStreet

Further consolidation appears in store for USD/JPY in the next few weeks, argue Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: Yesterday, we held the view that USD could rebound further, but it is unlikely to break the major resistance at 151.65. Instead of rebounding further, USD dropped sharply to a low of 150.27 before recovering to end the day at 150.71 (-0.42%). While the decline lacks momentum, as long as USD stays below 151.30 (minor resistance is at 151.00), it could weaken but is unlikely to break clearly below 150.10.

Next 1-3 weeks: Our update from Wednesday (15 Nov, spot at 150.55) is still valid. As highlighted, the recent buildup in upward pressure has faded. From here, USD is likely to trade in a range of 149.50/151.65.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY rises back above 158.00 despite hawkish BoJ outlook

USD/JPY rises back above 158.00 in the early European morning on Tuesday. The pair strengthens as the Japanese Yen fails to find any inspiration from hawkish BoJ expectations and looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, helps the pair stay supported.

Gold seems vulnerable near two-month low amid strong USD, higher US bond yields

Gold sticks to modest intraday losses heading into the European session, though it holds above the $4,100 mark, a two-month low touched earlier this Tuesday. The US Dollar retains its bullish tone and continues to undermine demand for the commodity. However, receding bets for an October Fed rate hike act as a tailwind for the non-yielding bullion and help limit further losses.

Ripple and Stellar weaken as derivatives positioning fades

Ripple (XRP) and Stellar (XLM) face pressure trading below $1.499 and $0.220, respectively, on Tuesday after a modest correction at the start of the week. Traders should be cautious as weakening derivatives metrics and fading bullish momentum suggest further corrections for XRP and XLM. Derivatives data shows a weakening and cautious signal among traders.

Europe in focus as French and Spanish politics drive sentiment

There are no tier-1 releases today. Focus will remain on developments in the European markets and geopolitical developments in the Middle East. In France, the key issue in the coming days will be whether the Socialists and Marine Le Pen's National Rally signal they are willing to topple the government over the budget.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.