Market Analytics and Considerations
Key Notes
- The other week, the US Dollar’s decline continued, pushing the value of DXY to a new 6-month trough.
- On Friday, a point of support came into play, and it has since helped to keep the depressions in check. The 2021–2022 big move, which maintained the dips just after a trendline violation last week, is now 50percent complete.
Through the first 2 weeks of trading in 2023, the US greenback has continued to decrease. Even though the Greenback held on footing at 103.45 at the outset of the year, traders have persisted. On the Friday before last, shortly following the announcement of the dreadful Services PMI figures that appeared at the lowest point since March 2020, the strong impulse again for downtrend returned. On the USD graph, this caused a negative engulfing, as well as the following Monday, traders drove prices to a new trough.
US DOLLAR NEAR TERM
Even after a brief breach during this week’s opening, traders can be seen attempting to defend that equilibrium point near the 102 range. The positive trendline extrapolation is playing into resistance, which is establishing a limited range. If resistance around 102.55 is breached, previous support will be tried as the following area of resistance, which is the 103.00 lever.
USD/JPY
Tonight, the Bank of Japan shall make a choice – criteria, and all eyes will be on the fine print for any signals that the BoJ’s position on yield curve management will soon alter.
The BoJ was indeed a notable exception in 2018, holding rates in negative zone even as global rates went up to curb inflation, reaching 40-year high points for Japan. The key question would be when or how the BoJ may begin to move towards a less policy due to the upcoming leadership transition at the bank and the skyrocketing inflation rates.
Given that the trajectory has plainly shifted, the bigger question is one of timeline: If the BoJ entirely avoids the subject tonight, logically leaving some footprints for bullish to pursue, for just how long could this bullish tendency proceed? Until something new related changes US interest rates, it appears that any positive flares would be a reversion in a bearish at this moment. This makes objects with a lesser resistance potential around 130 or 131.25 possible.
