. USD/JPY gains momentum on positive Monday - 27 March 2023

USD/JPY gains momentum on positive Monday – 27 March 2023

USD/JPY gains momentum on positive Monday – 27 March 2023

27 Mar 2023

A new daily high for USD/JPY is reached in the mid-131.00s as demand for haven assets declines.

FUNDAMENTAL OVERVIEW

  • On Monday, the USD/JPY gets a lot of momentum in the positive direction and receives support from several variables.
  • The JPY is weighed down and given support by the risk-on impulse and the widening rate differential between the US and Japan.
  • The USD bulls are on the defensive because of the Fed’s less alarmist stance, which could limit future gains.
  • The USD/JPY pair continues to gather momentum on Monday after making a little rebound on Friday from a low of around 129.65, or its lowest level since February 3. Through the first hour of the European day, the upward trend continues unabatedly, pushing spot prices to a new daily high in the mid-131.00s.
  • The safe-haven Japanese Yen (JPY) is undercut by an overall upbeat mood in the equities markets, which is considered as a major reason supporting the USD/JPY pair. Market jitters over the contagion risk were eased by the announcement that First Citizens Bank & Trust Company will purchase all of Silicon Valley Bank’s deposits and loans from the Federal Deposit Insurance Corporation (FDIC). Investors’ desire for perceived riskier assets is further increased by news that US officials are in the early stages of deliberating about expanding emergency lending facilities.
  • The risk-on sentiment and subsiding worries about a full-blown banking crisis sparked another rise in US Treasury bond yields. This causes the US-Japan rate differential to expand, which is perceived as another factor weighing on the JPY and giving the USD/JPY pair more support. The Federal Reserve’s indication that it may soon suspend the rate-hiking cycle in response to the recent instability in the financial sector, however, prevents the proponents of the US Dollar (USD) from hedging their existing wagers. This could then prevent the major from making any significant appreciating moves.
  • It is important to remember that the US central bank increased interest rates on Wednesday by 25 basis points, as was largely expected but sounded cautious about the prospects. Apart from this, expectations that the Bank of Japan (BoJ) will tweak its bond yield control policy and whittle down its massive stimulus under new Governor Kazuo Ueda might contribute to capping gains for the USD/JPY pair. This makes it wise to hold off on declaring that the recent rejection decline from a technically significant 200-day Simple Moving Average (SMA) has ended until some follow-through purchasing has taken place.

USD/JPY TECHNICAL ANALYSIS DAILY CHART:

USDJPY WEEKLY NEWS

Technical Overview

  • USD/JPY is currently trading in the down channel.
  • USD/JPY is currently trading below 20&50 SMA.
  • RSI is in buying zone which suggests bullishness and Stochastic suggests up trend.
  • USD/JPY resistance is at 131.235 & its immediate support level is 130.347

HOW TO TRADE USD/JPY

USD/JPY is currently trading in a down channel, although the price started climbing upward after finding support there. It is currently in a zone of resistance; if this zone is broken, more upside to the second resistance is possible.

TRADE SUGGESTION- BUY AT 131.235, TAKE PROFIT AT 132.466, SL AT 130.552