JPY or USD: who is stronger?

JPY or USD: who is stronger?

2022-01-26 • Updated

If we look at the daily charts of the US dollar index and the USD/JPY pair, we will see a misleading trend. The USD has been suffering since the beginning of the year and started recovering since January 10. At the same time, the Japanese yen couldn’t take revenge over the USD and couldn’t pull the pair significantly down. As a result, USD/JPY had been trading sideways and rose as soon as the USD recovered.

Why the Japanese currency couldn’t use its chance? Is there any hope on the JPY’s rise?

Although usually, currency moves depend on the economic data, it barely applies to the JPY.

The Japanese yen mostly depends on the market sentiment. In times of the risk aversion, it strengthens. In the case of the risk-on sentiment, it suffers.

Previously, both the USD and the Japanese yen were considered as safe-haven currencies that rose in times of uncertainties. Up to now, it seems like the USD has been losing its status of the safe-haven because the Fed is going to slow its rate hikes’ pace. However, the USD is still stronger than the JPY.

We could see that at the beginning of 2019. Although there was a risk-off market sentiment and the USD was weak, the USD/JPY pair didn’t move to crucial lows.  Later, the American currency managed to turn around. It pulled USD/JPY up and cut the chances for the JPY.

The improved market sentiment of the several past days affected the JPY even more. Clues on the progress in the negotiations between the US and China pushed all risky assets up and made safe-havens suffer.  Moreover, climbing Treasury yields increased the spread between US government bond yields and Japanese government bond yields that made the USD more attractive.

What to expect in the upcoming days.

At the beginning of the week, the market sentiment was shaken by the weak economic data from China. It seems strange that the Chinese economy affects the strength of the Japanese currency. But it doesn’t for certain. The weakness of the Chinese economy signals the harmful effect of the US-China trade war. The Chinese economy is one of the leading in the world. It’s not a surprise that the slowdown of it will affect other countries. As a result, the Japanese yen gained some points against the USD. Is it enough to pull the USD/JPY pair down and encourage the JPY?

The rise of the USD isn’t that extensive. However, the currency keeps trying to move upwards. Furthermore, more news on the progress in the deal between China and the US will support pull the JPY down.

Let’s take a look at the technical setups for the upcoming days.

USDJPYDaily.png

At the beginning of the week, the USD/JPY pair has been losing some points. This week won’t differ with the crucial events either for the JPY or for the USD. As a result, the trading will base on the market sentiment.

If there is further progress on the trade war between the US and China, the USD will strengthen and the Japanese yen will keep suffering against the American currency. On the daily chart, the Parabolic SAR indicator signals the upward movement. The first resistance is at 110.45. In case of the breakthrough, the pair will move towards 111.1320. The 200-day MA lies at this level, so the resistance may become a reversal point for the pair.

However, there are odds that the currency may firstly meet lows and then resume its upward movement. In this case, we can anticipate a fall to the pivot level at 109.2140. In case of the break, the next support lies at 108.5320.

Making a conclusion, we can say that according to the analysis, the USD is still stronger than the JPY and the near-term trend for the USD/JPY pair is bullish despite possible declines.

Similar

Oil: Russia-Ukraine Crisis Could Boost Oil Prices
Oil: Russia-Ukraine Crisis Could Boost Oil Prices

Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...

WTI and Brent React To a Key Pivot
WTI and Brent React To a Key Pivot

Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...

Latest news

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera