- The dollar retreats further from the top of the 114.75 range, approaching 113.00.
- Weak GDP figures hit the USD.
- USD / JPY is expected to drop towards 112.00 – Rabobank.
The dollar maintained its weak tone against the Japanese yen on Thursday, extending its reversal from the multi-year highs of 114.75 reached last week. The pair USD/JPY it has to hit fresh two-week lows below the middle of the 113.00 range following weaker-than-expected US macroeconomic figures.
US dollar sinks after weak GDP data
The dollar has fallen across the board following a softer-than-expected US Gross Domestic Product report. According to advanced figures released by the Commerce Department, US economic growth slowed to an annual rate of 2% in the third quarter, from 6% in the previous quarter, well below an already slower reading of the 2.7% expected by the market.
These figures have lowered expectations for a strong post-pandemic recovery, demonstrating that supply chain disruptions and shortages of raw materials are preventing companies from meeting growing demand.
The Bank of Japan’s statement of dovish monetary policy has also failed to offer any significant support to the USD. The central bank has reaffirmed its commitment to its ultra-expansive monetary policy, as widely expected, keeping interest rates close to zero and while lowering its forecasts for economic growth and consumer inflation for 2021.
USD / JPY is expected to decline towards 112.00 in the next three months – Rabobank
From a broader perspective, Rabobank currency analysts expect the USD to extend its reversal towards 112.00: watch the pair in a consolidation phase, before further appreciation: “This may be a warning to the market that, in Given the inflationary implications, the BoJ is not entirely satisfied with the JPY’s position in the worst-performing G10 currency so far this year. This signal may be enough to limit USD / JPY upside potential in the short term, particularly as weak US Q3 GDP data has also undermined the dollar today. We maintain a 3-month forecast of 112 USD / JPY. “
Technical levels
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