jeopardygameonlinefree| US-Japan spread accelerates yen depreciation, analysts: USD/JPY may challenge 160 mark again
Huitong Financial App News
Tuesday (May 21)JeopardygameonlinefreeUSD / JPY rose to 156Jeopardygameonlinefree.50, reaching a maximum of 156Jeopardygameonlinefree.54, confirming the overnight forecast of ING. The interest rate spread between the Federal Reserve and Japan remains firmly favorable to the dollar, and the yen depreciates under the acceleration of the leveraged carry trade.JeopardygameonlinefreeThe selling pressure has doubled. Market analysis forecasts that the US dollar / yen may challenge to break through the 160 mark before entering the overbought market.
(USD / JPY 1 hour chart, source: Yi Huitong)
Speculation about an interest rate hike by the Bank of Japan in June continued to rise, however, the dollar / yen extended its rally to three trading days. The Bank of Japan and the Federal Reserve run counter to expectations, and spreads remain firmly in favor of the dollar.
The BoJ's June rate hike may not be enough to curb speculation against the yen, and spreads will continue to expose the yen to the carry trade.
In the carry trade, investors borrow yen at low interest rates and use leverage to buy higher-yielding currencies such as dollars, boosting yields and putting selling pressure on the yen.
As ING predicted overnight, the panic of yen depreciation is repeated, and the dollar / yen is once again approaching 156.50.
The BoJ may need to set a more hawkish interest rate trajectory to weaken the dollar / yen.
Although the Bank of Japan will be the focus, investors should pay attention to the Japanese government's comments about the yen, and a stronger dollar / yen will increase the risk of intervention.
Later on Tuesday, investors should follow the Fed spokesman for clues about the Fed's interest rate path.
Members of the Federal Open Market Committee (FOMC) Thomas Barkin (Thomas Barkin), Michael Barr (Michael Barr), Rafael Bostick (Raphael Bostic), Christopher Waller (Christopher Waller) and John Williams (John Williams) will all speak on the calendar.
On Monday, Fed spokesmen such as FOMC members Michael Barr and Bostick agreed to boost confidence in inflation back to target before supporting interest rate cuts.
Recent remarks affected investors' expectations of the Fed's interest rate cut in September. Still, the market is betting on a rate cut in September.
The likelihood of the fed leaving September interest rates unchanged on Monday rose to 40.4% from 35.2%, according to CME's Fed Watch tool.
Views on inflation, the US labour market and the timing of Fed interest rate cuts need to be taken into account.
In the short term, the near-term trend of the dollar / yen will depend on what the central bank said before the initial purchasing managers' index for the services sector on Thursday. The Fed's hawkish comments are likely to further stimulate interest in the dollar / yen. However, weak US service sector activity could force the Fed to take a more dovish interest rate trajectory.
Technical Analysis of USD / JPY
Bob Mason, an analyst at FXEmpire, said the dollar / yen hovered above its 50-day and 200-day averages, confirming bullish price signals.
The USD / JPY break of 157will support its move to 158th, which could make a high of 160.209 on April 29th play a role.
Alternatively, a fall of the dollar / yen below 155 could cause bears to move near their 50-day moving average. Falling below the 50-day moving average may herald a fall to 151.685 support.
The 14-day RSI is 58.30, indicating that the dollar / yen will return to its April 29th high of 160.209 and then enter the overbought zone.
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