USD/JPY What will be the consequences of Evergrande and the USA?

2 thg 10, 2023

The USD/JPY exchange rate is continuing to rise towards the 150.00 mark, approaching new highs of the last year in Asian trading on Monday. The pair is supported by the renewed increase in US Treasury bond yields and accommodating comments from the Bank of Japan (BoJ). However, Japanese intervention risks in the foreign exchange market are accumulating. The USD/JPY pair experienced a slight sell-off while attempting to surpass the psychological resistance of 150.00 on Thursday. The asset is correcting marginally, following the tracks of the US Dollar Index (DXY), which is experiencing long liquidation after reaching a fresh 10-month high at 106.80. S&P500 futures gained some ground in the London session, indicating an improvement in market participants' risk appetite. US equities closed unchanged on Wednesday due to caution regarding the Federal Reserve's (Fed) interest rate outlook. The US Dollar Index (DXY) is gradually correcting towards around 106.30 after failing to extend its rally. The broader appeal for the US Dollar remains bullish, as the US economy is resilient due to declining inflation, stable employment growth, and robust consumer spending. Unlike other G7 economies struggling to find solid ground due to their inability to cope with the consequences of higher interest rates imposed by central banks, the US economy continues to excel in the labor market, household demand, and inflation. However, its Manufacturing PMI has been consistently contracting for the past ten months. Investors anticipate a recovery in factory activities ahead, as the order book for core goods surprisingly expanded in August. Durable Goods Orders rose by 0.2%, while investors anticipated a decline of 0.5%. In July, orders contracted sharply by 5.6%. The potential intervention by the Bank of Japan (BoJ) could strengthen the Japanese Yen. Japanese Finance Minister Shunichi Suzuki reiterated on Thursday that he does not rule out any steps to respond if there is excessive foreign exchange volatility. He further added that the authority is closely monitoring foreign exchange movements with a sense of urgency. Additionally, at the 149.90 level, we can observe a breakout of an H4 Swing High and a retest of the trendline that has been present for a month. My goal will be to look for a short position to enter the market during the New York session, considering a possible entry at M15. Let me know what you think, comment, and leave a like. Greetings from Nicola, the CEO of Forex48 Trading Academy.