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10 Apr 2015
USD/JPY: Trapped in the longer term range; Holds in the 120's
FXStreet (Guatemala) - USD/JPY is currently trading at 120.13 with a high of 120.63 and a low of 120.04.
The less committed bulls in USD/JPY have bailed and the major is suffering losses from through the mid point of the 120 handle as the downside plays out in to the close for the week. 119.60 would stand as a key support for the pair, where bulls may look for cheap dollars in an environment where the greenback remains in favour. However there are analysts that are calling for the end of the dollar rally for now, as bets are placed for hikes to come in at a gradual pace and not until the end of this year or potentially not until to 2016. With the backdrop of the dismal and previous NFP's, continuous unfavourable data will under pin such a tone in the dollar.
Analysts at HSBC noted that on each of the four previous tightening cycles seen in the past 30 years, the USD has fallen in the period immediately after the first rate rise. This "buy the rumour, sell the fact" behaviour during a tightening cycle suggests that one should be cautious about expecting too much in the way of further USD strength should the Fed move to raise rates later this year. Technically, USD/JPY remains in the familiar wide band of ranges within ranges and until there is a catalyst, the major is likely to drift to and fro the February low at 116.64 and the December and March highs at 121.86/122.04.
The less committed bulls in USD/JPY have bailed and the major is suffering losses from through the mid point of the 120 handle as the downside plays out in to the close for the week. 119.60 would stand as a key support for the pair, where bulls may look for cheap dollars in an environment where the greenback remains in favour. However there are analysts that are calling for the end of the dollar rally for now, as bets are placed for hikes to come in at a gradual pace and not until the end of this year or potentially not until to 2016. With the backdrop of the dismal and previous NFP's, continuous unfavourable data will under pin such a tone in the dollar.
Analysts at HSBC noted that on each of the four previous tightening cycles seen in the past 30 years, the USD has fallen in the period immediately after the first rate rise. This "buy the rumour, sell the fact" behaviour during a tightening cycle suggests that one should be cautious about expecting too much in the way of further USD strength should the Fed move to raise rates later this year. Technically, USD/JPY remains in the familiar wide band of ranges within ranges and until there is a catalyst, the major is likely to drift to and fro the February low at 116.64 and the December and March highs at 121.86/122.04.