Today, I will explain the following website. (AI-generated)
止まらない円安、FRB高官の発言と米ドル買い、ドル円は157円が視野に
Contents
Understanding the Unstoppable Depreciation of the Yen
In the foreign exchange market, the Japanese yen continues to weaken, while the US dollar is experiencing a mood of buybacks. The recent rebound in US interest rates has paused the narrowing of the interest rate differential between Japan and the US. If statements by Federal Reserve (Fed) officials lead to a rise in US interest rates, the USD/JPY could attempt to reach 157 yen. Conversely, in a scenario where the USD/JPY pulls back, the conversion of 156 yen into a support level will be a point of interest.
Overview of the Current Forex Market Trends
On the 20th, the forex market saw the yen weakening, especially against cross currencies. Meanwhile, US bond markets have shifted back to a rebounding trend in yields. This has led to a dominant US dollar in the currency market, excluding against the Swedish krona and Mexican peso. With the yen weakening and the US dollar being bought back, the USD/JPY has shifted to a battle around the 156 yen level.
Impact of the Federal Reserve Officials’ Statements on the USD/JPY
Despite employment statistics for April falling below expectations and the Consumer Price Index (CPI) suggesting a slowdown in inflation, several Fed officials, including John Williams of the New York Fed and Thomas Barkin of the Richmond Fed, have expressed that time is needed to be confident that inflation is trending towards the 2% target. The stance of the Fed, wary of the risk that inflation may not decline, has led to a decrease in the probability of a rate cut in September falling below 50% in the short-term financial markets. If the Fed officials’ statements this week are perceived as hawkish, expectations for a September rate cut may recede further, which could be a factor in the rebound of US interest rates.
Technical Analysis and Future Outlook for USD/JPY
The USD/JPY has seen a firm rise to the 156 yen level on the 20th. When examining the trend of the interest rate differential between Japan and the US, which greatly influences the trend of the USD/JPY, the tendency for it to narrow has paused due to the rebound in US interest rates. If the US bond market movements and the statements of Fed officials lead to a widening of the Japan-US interest rate differential, the USD/JPY may increasingly attempt the 157.00 level that we have been focusing on in the IG forex report.
Examining the USD/JPY Trend Amidst the US-Japan Interest Rate Differential
The USD/JPY’s rise to the 156 yen level is supported by the pause in the narrowing of the US-Japan interest rate differential. The key question is whether this differential will start to widen again, with the movements in the US bond market playing a crucial role. The statements of Fed officials will likely be a significant factor affecting the bond market.
Key Levels to Watch in USD/JPY Trading
From a technical perspective, the USD/JPY has maintained the short-term support line and the 50-day moving average, fully breaking through the 21-day line, which now acts as a support line (refer to the chart below, blue line). With the pause in the narrowing of the US-Japan interest rate differential, the USD/JPY may try the 157.00 level. A breakout of the 156.60 level, as well as the high of 156.78 from May 14th, should be watched as signals for an attempt at 157 yen. If the USD/JPY completely breaks through the 156.78 level, traders should be conscious of a try at 157.00.
Strategies for Forex Traders in a Volatile Currency Market
As the USD/JPY faces potential pullbacks, the first level to note is the ‘support conversion’ at the 156.00 level. This level, which halted the market’s rise on the 17th, provided support in the recent New York trading session. If the 156.00 level converts to a support level, it will strongly impress upon market participants the strength of the USD/JPY’s position. If the USD/JPY battles below 155 yen, the Fibonacci extension levels will be of interest. The 155 mid-level corresponds to the 23.6% retracement, and since the 16th of last week, it has been recognized as both resistance and support. Now, it should be considered as a support level.
Traders should monitor the support levels, particularly around 156.00, to see if the market rebounds. The first point to confirm is whether the USD/JPY will attempt lower levels, especially if it breaks through the support levels mentioned above.
Understanding Support and Resistance Levels in Forex Trading
Support and resistance levels are crucial concepts in forex trading, acting as barriers within forex markets where the price of a currency pair tends to reverse direction. Traders use these levels to make informed decisions about entry and exit points.
Indicators and Signals for Timing Your Trades
Indicators such as the Stochastic Oscillator and the Relative Strength Index (RSI) can provide signals for potential reversals or continuations in the market. For example, an overbought condition in the Stochastic Oscillator, coupled with a dead cross, could indicate a potential adjustment and pullback. It’s essential to use these indicators in conjunction with other analysis methods to time trades effectively.
