The foreign exchange market saw a risk-off move across the board on Tuesday, with the USD/JPY meeting key resistance at the 140.00 figure. The pair fell 0.63% today. This case further raises concerns about the US economy and its overall impact on currency valuations. From a technical standpoint, analysis of the daily chart shows increasing bullish pressure, looking for a breakout and continuation to the upside from a longer-term ascending channel pattern.
Much of the recent fall of the US Dollar has been due to panic over an impending recession in the United States. Investors are understandably highly attuned to US economic data right now, given its potential to sway future Federal Reserve policy shifts. The Federal Reserve’s independence is a key factor. The US Dollar’s current picture is somewhat colored by constant incredulousness at the Fed’s independence.
Given the USD/JPY is one of the top three major currency pairs, it has a huge impact on global finance. The recent movements in exchange rates are not happening in a vacuum. During the Tuesday Asian hours, the EUR/USD is sitting at 1.1530. It’s the third day of increases in a row for the currency combination. The GBP/USD pair is continuing to strengthen and it is currently exchanging hands near 1.3370. This exceptionally positive shift is being powered largely by the ongoing, blistering collapse of the US Dollar.
In its July quarterly review of regional economic conditions throughout Japan, the Japanese government continued to stick with that rosy economic assessment. Even with these upbeat judgments, officials cautioned that downside risks were rising due to the impact of US trade policies. Despite signs of resilience in the Japanese economy, analysts cautioned that continued vigilance is important, as there are plenty of challenges that lie outside Japan’s borders.
Throughout this rise, the USD/JPY has traded in a constructive ascending channel pattern. This may be a sign of persistence to the upside, buoyed by increasing accumulation pressure. Market participants should be on the lookout to avoid getting too optimistic as we all emerge from an economic fog of war.
This week, traders are laser-focused on US economic data. Specifically they’re interested in knowing how NFT’s will influence the conduct of monetary policy and their possible impacts on exchange rates. Keeping a finger on the economic pulse The continuing interplay between monetary and fiscal policy in both the U.S. and Japan will remain crucial to market direction.