USD falls against Yen as rate expectations decline, rate forecasts shift to a more dovish stance, and the USDJPY declines.
US Dollar fails to gain momentum as yield strained
The Japanese yen’s reputation as a safe haven has increased its demand lately. USDJPY falls. Fears of a domino effect and a possible financial crisis in the US spread across the markets. Following the collapse of the SVB (Silicon Valley Bank).
The likelihood of a 50 basis point rate hike fell as US authorities stepped in to reassure customers. Collateral deposits backed by the Fed and US Treasury. Markets now expect the Federal Reserve to hike rates by 25 basis points (0.25%) at next week’s FOMC meeting.
Source: FedWatch Tool
USD impacted by financial worries
The situation has altered as rising worries about the stability of the US financial system caused the USD/JPY to fall below its prior support at the 200-day moving average.
The main currency was pushed to the 50-day MA as a result, and it is now holding at 132.400 as support. Although macro-environment revaluing has been the main force behind the action. A breach of important technical levels may help to direct the next step.
Technical Perspective
The USDJPY remains weak and oscillates in the negative range. At danger is the 50-Day Moving Average (DMA) near the 132.50/60 region. where support from the 23.6% Fibonacci retracement at 133.05, 135.00 is accessible if this level is held above. A break below the 50-day MA could spark a move toward the 130.00 level, If there is more pessimism regarding the fragility of the US financial system.
Net short and long retail trader’s position
According to USDJPY retail trader statistics, 1.14 traders are short for every 1 trader, meaning that 46.65% of traders are net long. However, speculators remain fewer net-short today than they were yesterday and the week prior.
