- The dollar fails to exceed 113.70 and remains operating near three-year highs.
- The Japanese yen weakens in a risky session.
- USD / JPY could extend its rally beyond 114-00 – UOB.
The bullish attempt of the US dollar seen at the beginning of the American session has again hit the resistance at the 113.70 area, and the pair USD/JPY it fell to the middle of the range at 113.00. The USD remains strong against a weaker yen, trading just below three-year highs at 113.80 after a 3.3% rally in the past four weeks.
The yen suffers from a heightened appetite for risk
The Japanese yen is trading lower against its major peers with positive market sentiment hurting safe havens in favor of riskier assets. The world’s major stock indices posted significant gains on Thursday as concerns about rising inflation and supply chain bottlenecks have receded.
On the macroeconomic front, Japanese industrial production contracted at a rate of 3.2% in August, and automotive production plummeted due to a global shortage of chips.
In the US, weekly jobless claims have fallen below 300,000 new claims for the first time in 19 months, while on Wednesday the Federal Reserve offered new signs suggesting that the official announcement of a gradual reduction in unemployment QE could take place at your November meeting. However, the impact on the USD has been limited, with the dollar trading lower against most major currencies on Thursday.
USD / JPY could be about to move above 114.00 – UOB
In a bigger picture, the pair is stable near recent highs and according to the UOB currency analysis team, a further rally should not be ruled out: “On Tuesday (Oct 12, place at 113.40), we highlight that the impulsive rise suggests that further USD strength would not be surprising and that the next resistance is at 114.20. There is no change in our opinion for now, although short-term overbought conditions could lead to a couple of days of consolidation first. USD strength is considered intact as long as it does not break above 112.80 (the ‘strong support’ level was yesterday at 112.65) “.
Technical levels
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