- The dollar takes a breather after hitting new five-year highs at 114.70.
- A heightened appetite for risk and a pause in the rally in US yields are weighing on the US dollar.
- USD / JPY remains positive and could reach 117.80 / 118.60 – SocGen.
The USD it has declined after hitting new five-year highs at 114.70pm on Wednesday, to consolidate in the lower range of 114.00. The pair USD/JPY it has turned negative on the daily charts, although the short-term trend remains positive, having risen almost 5% over the past four weeks.
USD loses steam amid increased risk appetite
The JPY is taking advantage of a somewhat weaker US dollar on Wednesday, weighed down by positive market sentiment. Wall Street Indices are trading moderately up for the second day in a row; the Dow Jones is up 0.49%, the S&P 500 appreciates 0.39% and the Nasdaq technical index is up 0.66%, thanks to the publication of optimistic results of quarterly earnings in the health sector.
Investor optimism and the pause in the rally in US bond yields have taken a toll on demand for the dollar, allowing most large companies to post moderate recoveries. The US dollar index loses about 1% to 94.50, a year high, reached last week, as investor expectations about the monetary tightening by the Federal Reserve have faded a bit as others Major central banks are beginning to anticipate the possibility of accelerating their monetary operations. normalization plans to deal with inflationary pressures.
The Japanese yen, on the other hand, remains heavy due to an adverse monetary policy differential. Indications from the Federal Reserve about the gradual reduction of QE have been widening the Treasury yield gap between the US and Japan, whose central bank is holding the 10-year note near zero through a control curve. yield, and has reduced the attractiveness of the yen to investors.
USD / JPY: Still heading towards 117.80 / 118.60 – SocGen
Société Générale’s currency analysis team maintains its bullish bias on the pair, with a potential target of 117.80 / 118.60: “The signs of retracement are not yet visible; 110.80 should cushion (…) The next potential targets are at 115.50 and the 2016 high of 117.80 / 118.60 “.
Technical levels
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