(MENAFN– Daily Forex)
- With the start of this week’s trading, the Japanese yen declined in general against the rest of the other major currencies.
- The usd/jpy currency pair had a rebound towards the 130.88 resistance level, recovering from the price collapse towards the 127.22 support level during last week’s trading.
- Despite the rebound, the US dollar is looking forward to a new low for the year as weak economic data and dovish comments from Federal Reserve officials suggest that the central bank may be about to slow down the pace of interest rate hikes.
The Bloomberg Spot Dollar Index fell 0.3% at the beginning of this week’s trading, and the euro was among the biggest gainers among the G10 currencies, as the US currency measure approached its lowest level since April of last year. The European single currency rose 0.7% to $1.0927 ahead of a slew of European Central Bank speakers including President Christine Lagarde.
US Federal Reserve officials last week put the case for another shift in the US central bank’s tightening campaign after economic data including declines in retail sales and factory production, as Governor Christopher Waller, one of the most hawkish in the Federal Reserve, favors a quarter-point rate hike. Institutional investors, including pension funds, insurance companies and mutual funds, have boosted net short positions in the dollar to the greatest extent since June 2021, according to the latest CFTC data.
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In Europe, Lagarde said on Friday that policymakers should not let up in their battle against inflation even as consumer price hikes appear to have peaked. While overall inflation eased, core price gains reached a record high in december . Overall, the euro could rise further this week if preliminary PMI data due for release on Tuesday indicates that the economy is growing, economists at the Commonwealth Bank of Australia wrote in a note.“We see risks tilting towards a stronger PMI reading than consensus expects because energy prices have continued to decline.”Forecast of the dollar pair against the Japanese yen:
According to the performance on the four-hour chart, the price of the USD/JPY currency pair moves within an ascending channel range.
The stability is above the psychological resistance 130.00, confirming the bulls’ control.
The bullish momentum will increase if the currency pair moves through the resistance 131.65, but according to the performance on the daily chart, it is still a pair.
At the beginning of the exit from the sharp descending channel, it lacks momentum to confirm the trend turning bullish, and may need to move towards the resistance levels 131.85 and 132.90 to confirm the upward shift.
On the other hand, breaking the support level at 128.70 would end the market’s aspirations to turn the trend upwards. Today, the currency pair will interact with the announcement of the PMI readings for the manufacturing and services sectors from the United States.