. Dollar hits 2-decade high vs yen, sterling struggles

Dollar hits 2-decade high vs yen, sterling struggles

07 Jun 2022

Dollar Index is trading up 0.33% at 102.747

The U.S. dollar rose to a two-week high as rising U.S. Treasury yields supported the greenback, pushing the Japanese yen to its lowest level against the dollar in two decades.

The yen dropped to a 20-year low of 133 per dollar, levels that had previously been highlighted as intervention territory, a day after central bank governor Haruhiko Kuroda reiterated an unwavering commitment to “powerful” monetary stimulus.

The yen is sensitive to interest rate differentials between Japanese debt and U.S. bonds.

Benchmark 10-year Treasury yields had climbed as high as 3.064% in Tokyo trading for the first time in almost four weeks, before slipping back to 3.0251%. Spreads between 10-year U.S. and Japanese debt held at 277 bps, not far from a 3-1/2 year high of 292 bps hit last month.

The dollar index, which measures the dollar against a basket of six currencies including the yen, rose as much as 0.39%, extending on Monday’s 0.26% advance and hitting its strongest level since May 23, before trimming its advance.

The euro slipped 0.14% to $1.0680 ahead of the European Central Bank’s policy-setting meeting on Thursday, where they are expected to announce an end to bond purchases, paving the way for a first-rate increase in 11 years at the July meeting.

On technical fronts Dollar Index RSI stood at 56.17 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : Dollar Index – BUY: 102.67, TARGET: 103.07, STOP LOSS : 102.40