May 21st 2021
Is it time for the JPY to join the USD selling party?
EUR/JPY, GBP/JPY, and CHF/JPY are at, or very close to the top of their recent trading range.
JPY weakness against its peers has been a feature of the market since the March dollar reversal. However, the JPY is holding its own now, and it has seen some sharp corrections although often short-lived.
The JPY’s nemesis of rising US Bond Yields is benign for now. The FOMC is winning the argument on inflation, due to a lack of data for a few more weeks at least.
Although there isn’t much good news coming out of Japan when has that troubled the JPY in the past?
No one wants to buy Dollars right now, so maybe the place to look to sell Dollars is against the JPY. As everything else is so overbought.
This morning the market is trying to break 108.80 and if it clearly gives way I would expect further USD weakness to 108.20 and possibly 107.60.
However, the outlook for the USD will improve only if it can recover 109.20/40. Until then the pressure will remain on the downside.
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