Japanese Yen Sinks on Higher Yields and Energy Prices. Where to for USD/JPY?

Japanese Yen, USD/JPY, Fed, Treasury Yields, Crude Oil, WTI – Speaking Factors

  • USD/JPY makes a brand new excessive as yields explode throughout G-10 curves
  • Increased vitality prices emerge after OPEC+ preserve manufacturing objectives
  • Bullish USD/JPY momentum is unfolding, will it proceed to set-up a development?

The Japanese Yen is coming below strain from rising G-10 yields, greater vitality prices and constructive threat urge for food to start the yr. This led to USD/JPY making a 4-year excessive of 116.35 yesterday.

The market has began 2022 by re-pricing the Federal Reserve’s climbing timeline and it’s now anticipating extra fee rises than beforehand anticipated.

US Treasury yields have risen considerably throughout the curve, with the benchmark 10-year bond just lately buying and selling above 1.68%, after ending 2021 close to 1.50%.

Japanese traders are extremely cognisant of yield after experiencing many years of close to zero rate of interest returns. Whereas Japanese authorities bonds (JGBs) have seen an uptick of a few foundation factors, the remainder of the G-10 authorities bond curves are notably greater.

OPEC+ met final evening and agreed to stay to the present path of returning manufacturing that had been withdrawn within the aftermath of the outbreak of Covid-19. Their analysts now see a each day surplus of 1.4 million barrels a day for the primary quarter, in opposition to the earlier estimate of 1.9 million barrels.

Crude oil went greater consequently, with the WTI futures contract making a excessive of USD 77.64 a barrel. Japan depends on importing vitality commodities to gas their economic system.

The constructive outlook has seen threat belongings admire to date this week, with most fairness markets starting 2022 within the inexperienced.

Notable exceptions had been the Nasdaq, which is prone to greater yields, and Chinese language indices that had been weighed down by home components.

Wanting forward, the Fed’s assembly minutes from their final get collectively can be launched later at present and Tokyo CPI for December is due for launch tomorrow.

USD/JPY – Technical Evaluation

A bullish triple shifting common (TMA) formation requires the value to be above the brief time period easy shifting common (SMA), the latter to be above the medium time period SMA and the medium time period SMA to be above the long run SMA. All SMAs additionally must have a constructive gradient.

any three of the ten, 13, 21, 34, 55, 100 and 200-day SMAs, the standards for a bullish TMA have been met.

Resistance might be on the latest excessive of 116.353 whereas assist may be on the pivot factors of 115.524 and 112.727. The latest low of 112.533 may additionally present assist.


Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the feedback part beneath or @DanMcCathyFX on Twitter


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