- Dollar remains offered and hits one-week near 113.50.
- Profit-taking hurts USD as Fed tightening expectations diminish.
- USD/JPY poised to extend gains beyond 115.00.
USD/JPY poised to extend gains beyond 115.00. The USD is headed lower on Friday, extending its reversal from multi-year highs at 114.70 to session lows just above 113.55. The dollar is on track to post its first negative weekly performance since late August.
U.S. dollar falls as Fed tightening expectations diminish
Investor expectations that the Federal Reserve would lead the world’s major central banks toward monetary policy normalization, which boosted the U.S. dollar over the past two months, have faded into the background, reducing demand for the U.S. dollar.
Accordingly, expectations of monetary tightening have been shifting as other central banks. Such as the BoE and BoC, have begun anticipating the possibility of raising rates to address inflationary pressures.
Moreover, profit-taking could also be responsible, at least in part, for the current dollar weakness. Since the USD index hit one-year highs last week against its major rivals, some investors may have closed their long positions.
The broader picture, however, remains quite favorable for the dollar, with the yen hampered by an adverse monetary policy differential. The Fed is about to begin rolling back its monetary stimulus program. And additionally is likely to hint at a rate hike in mid-2022. With the BoJ still engaged in ultra-expansionary policy and maintaining a yield control curve. The widening spread between Japanese and US yields will continue to be favorable for the USD.
USD/JPY: Seen appreciating beyond 115.00 – ING
According to ING Bank’s FX analysis team, the current reversal is just a corrective reaction ahead of further appreciation: “We are very bullish on USD/JPY and see the correction finding support somewhere in the 113.20/70 area.”
Today’s Last Price 113.56
Daily Rate -0.41
Today’s Daily % Change -0.36
Daily Open 113.97
20 Daily SMA 112.51
50 Daily SMA 110.88
100 Daily SMA 110.53
200 Daily SMA 109.12