- The yen is among the best performing currencies on Thursday.
- The dollar rises after the fall on Tuesday.
- After the Fed, economic data and on Friday the Bank of Japan.
USD/JPY is falling significantly on Thursday, following the Fed’s decisions on Wednesday and after breaking multi-day support. The yen gains momentum the day before the Bank of Japan’s turn.
Between risk, central banks and data
The yen is favored on Thursday in a context of risk aversion. The futures of the main Wall Street indices trade with falls around 2% on average. The USD/JPY pullback was accelerated along with the drop in futures and after the rate hike by the Swiss National Bank.
Technical factors may also have contributed. USD/JPY has firmly broken the 133.50 zone, which had served as containment in the previous days. Short-term technical indicators point lower. . A clear return above 133.50 could ease current pressures.
The pair reached the lowest level at 132.29, the lowest since June 6th. Then it bounced and it’s over 133.00. The strong bounce above 60 pips is a positive sign for the dollar, although not enough to change the bias at the moment.
The market continues to analyze what the most important rise in interest rates since 1994 by the Federal Reserve. President Powell He did not guarantee another rise of 75 points for the next meeting, but it was made clear that they will continue to rise.
The economic calendar ahead is still loaded. On Thursday in the US, the weekly report of requests for unemployment benefits and the figures for housing starts will be published. Before that, the Bank of England will announce its monetary policy decision.
Friday will be the turn of the Bank of Japan. No changes are expected from the Japanese monetary authority. Analysts at TD Securities estimate the focus will be on whether officials express concerns about the yen. “The BoJ is likely to maintain current policy status throughout this year but could end COVID-related macroprudential policies in the coming months,” they said.
Technical levels
Source: Fx Street
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