Forex and Currency News :: Page 146

Archive for Forex and Currency News – Page 146

The Analytical Overview of the Main Currency Pairs on 2022.04.26

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0806
Prev Close: 1.0711
% chg. over the last day: -0.88%

Last week, hawkish comments from various politicians increased the risks of aggressive policy tightening by global central banks. Analysts expect the US Federal Reserve to raise interest rates by half a point at its next three meetings and the European Central Bank to raise interest rates by 25 basis points in July.

Trading recommendations

Support levels: 1.0699
Resistance levels: 1.0770, 1.0796, 1.0870, 1.0908, 1.0936

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. Growth in the dollar index led to the fall of the European currency. The MACD indicator has become negative, the selling pressure remains, but the price has reached the support level. Under such market conditions, it is possible to look for buy trades on intraday timeframes from the support level of 1.0699, but only with short targets and confirmation. Sell trades should be considered from the resistance level of 1.0770, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0936 resistance level and fixes above, the uptrend will likely resume.

News feed for 2022.04.26:

– US Core Durable Goods Orders (m/m) at 15:30 (GMT+2);
– US New Home Sales (m/m) at 17:00 (GMT+2);
– US CB Consumer Confidence (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2830
Prev Close: 1.2741
% chg. over the last day: -0.69%

The UK economy faces rising commodity prices and declining exports, leading to lower profits for British corporations. The Bank of England must find a middle ground to counter inflation and not put the economy into stagflation. As a result, the fundamental background for the British pound is extremely contradictory. On the one hand, the probability of a stagflation scenario puts pressure on the national rate. On the other hand, the Bank of England has already raised the interest rate three times and plans to tighten monetary policy in the future, which will positively affect the pound.

Trading recommendations

Support levels: 1.2719
Resistance levels: 1.2791, 1.2862, 1.2917, 1.2981, 1.3010, 1.3083, 1.3115

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The MACD indicator is in the negative zone, but there are the first signs of sellers’ weakness in the form of divergence. Under such market conditions, sell trades should be looked for from the resistance level 1.2792 or 1.2863, but with confirmation. For buy deals, traders may consider the level of 1.2719, but only after the appearance of a bullish initiative and with short targets.

Alternative scenario: if the price breaks down through the 1.3083 resistance level and fixes above, the mid-term uptrend will likely be resumed.

There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 128.53
Prev Close: 128.12
% chg. over the last day: -0.32%

The monetary policy of the Bank of Japan remains unchanged. The central bank uses an ultra-soft approach to push the inflation rate closer to the 2% target. The Bank of Japan will hold its next monetary policy meeting this week, but analysts do not expect changes. Thus, fundamentally, USD/JPY quotes tend to rise as the Fed tightens monetary policy, which leads to a rise in the dollar index. But traders should not forget that the Bank of Japan will enter the debt market and sell government bonds to prevent a significant depreciation of the yen in a short period of time. Therefore, a correction might occur soon.

Trading recommendations

Support levels: 126.69, 125.48, 124.66, 122.97
Resistance levels: 129.36

The medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator has become negative. The price has taken a more flat structure. Under such market conditions, it is best to look for buy deals, expecting the continuation of the uptrend, but after the price makes a pullback to the nearest support levels. First of all, it is worth considering the support level of 126.69, but with additional confirmation. A resistance level of 129.36 may be considered for sell deals, but only with short targets.

Alternative scenario: If the price fixes below 125.55, the uptrend will likely be broken.

News feed for 2022.04.26:

– Japan Unemployment Rate (m/m) at 02:30 (GMT+2).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2711
Prev Close: 1.2735
% chg. over the last day: +0.20%

The Canadian dollar is a commodity currency, highly dependent on oil price dynamics and the dollar index. The dollar index continued to rise yesterday, while oil prices finished the day at the opening level. As a result, the USD/CAD currency pair traded particularly unchanged. Fundamentally, there are currently no prerequisites for a medium-term trend in USD/CAD.

Trading recommendations

Support levels: 1.2644, 1.2607, 1.2521
Resistance levels: 1.2776, 1.2849

In terms of technical analysis, the USD/CAD currency pair is bullish. Buying pressure has decreased, but the MACD indicator remains positive. Trade is worth it only with short targets. Under such market conditions, it is better to look for buy trades on the lower timeframes from the support level of 1.2644 or 1.2607, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2776, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below 1.2521, the downtrend will likely be resumed.

There is no news feed for today.

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Financial News Forex and Currency News

26 Apr

Trade Of The Week: Is The Pound In Trouble?

By Lukman Otunuga Senior Research Analyst, ForexTime

Sterling hijacked our attention last Friday after collapsing like a house of cards!

It has stumbled into the new week under renewed pressure, struggling to nurse deep wounds inflicted by the dismal retail sales and consumer confidence data. Mounting concerns over the cost-of-living crisis dragging the UK economy into a recession continue to hammer the pound, which is currently trading at levels not seen since September 2020. Disappointing economic data may fuel speculation over the BoE slowing interest rate rises while political noise from Westminster regarding the post-Brexit trade deal is likely to compound the currency’s woes. Since the start of April, sterling has weakened against most G10 currencies, shedding over 3% versus the dollar of writing.

Taking a quick peek at the technicals, prices look heavily bearish on the weekly timeframe with support at 1.2750. A solid breakdown below this point could drag the GBPUSD to levels not seen since mid-2020 around 1.2500.

More pain on the horizon for sterling?

Since the start of 2022, the pound has weakened against almost every single G10 currency. It’s is down over 6% versus the dollar and more than 5% against the Canadian dollar.

The pound has the potential to weaken further if disappointing economic data forces the Bank of England to adopt a cautious approach towards rate hikes. In fact, Andrew Bailey, BoE governor recently hinted that the UK interest rates may be increased less aggressively amid recession fears.

Indeed, retail sales fell by an unexpected 1.4% in March as the rising cost of living hit consumer spending. Consumer confidence plunged to its lowest level since the 2008 recession while PMIs decline in April, signalling that the economy is slowing considerably. But with inflation hitting a 30 year high of 7% which is more than triple the target of 2%, the BoE is certainly in a tricky position.

The central bank is widely expected to raise interest rates by 0.25bp in May, with a total of 6 hikes expected by the end of 2022.

However, repeatedly weak economic data and post-Brexit related uncertainty could throw a spanner in the works for BoE hawks – resulting in a weaker pound. This weakness is likely to be intensified by an increasingly aggressive and hawkish U.S Federal Reserve.

The week ahead…

It’s a relatively quiet week on the UK economic calendar. However, this does not mean it will be a quiet week for the British pound.

The GBPUSD has already dropped over 100 pips this morning, with weakness being seeing across the board.

There is a lot going on with the dollar with key economic data likely to inject the currency with renewed vigour. Over the next few days, US consumer confidence data, Q1 GDP, consumer sentiment and the PCE deflator among other key reports will be published. Should they reinforce market expectations over the Federal Reserve aggressively raising interest rates, the dollar is set to appreciate further – dragging the GBPUSD lower.

GBPUSD bears step into higher gear

The GBPUSD is heavily bearish on the daily timeframe as there have been consistently lower lows and lower highs. Prices are trading well below the 50, 100 and 200-day Simple Moving Average while the MACD trades below zero. Interestingly, the RSI has fallen below 30 which suggests that the GBPUSD could be oversold.

A solid daily close below the 1.2750 support level could see the currency pair sink towards 1.2600 before experiencing a technical bounce. Alternatively, should 1.2750 prove to be reliable support, the GBPUSD could rebound back towards 1.2900 before resuming the downtrend.

On the monthly timeframe, the GBPUSD is respecting a monthly bearish trend. A solid monthly close below 1.2750 could open the doors towards 1.2500 and 1.2300. If bears run out of steam, a move towards 1.3000 and 1.3150, respectively.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

25 Apr

Murrey Math Lines 25.04.2022 (EURUSD, GBPUSD)

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

In the H4 chart, EURUSD is trading below the 200-day Moving Average to indicate a possible descending tendency. In this case, the price is expected to continue falling to reach the support at -1/8. Still, this scenario may no longer be valid if the price breaks the resistance at 1/8 to the upside. After that, the instrument may reverse and correct up to 3/8.

As we can see in the M15 chart, the pair has broken the downside line of the VoltyChannel indicator and, as a result, may continue trading downwards.

GBPUSD, “Great Britain Pound vs US Dollar”

As we can see in the H4 chart, GBPUSD is approaching the “oversold area”. In this case, the price is expected to test 0/8, rebound from it, and then resume growing to reach the resistance at 2/8. However, this scenario may no longer be valid if the price breaks the resistance 1/8 to the upside. After that, the instrument may correct towards the resistance at 2/8 without testing the support at 0/8.

In the M15 chart, the pair may break the upside line of the VoltyChannel indicator and, as a result, continue its growth.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Financial News Forex and Currency News

25 Apr

Japanese Candlesticks Analysis 25.04.2022 (USDCAD, AUDUSD, USDCHF)

Article By RoboForex.com

USDCAD, “US Dollar vs Canadian Dollar”

As we can see in the H4 chart, after forming a Shooting Star reversal pattern close to the resistance level, USDCAD is reversing in the form of a new correctional impulse. In this case, the downside correctional target may be at 1.2690. However, an alternative scenario implies that the asset may grow to break the resistance level at 1.2790 and then continue the uptrend without any pullbacks.

AUDUSD, “Australian Dollar vs US Dollar”

As we can see in the H4 chart, AUDUSD has formed several reversal patterns, such as Shooting Star, near the resistance area. At the moment, the asset is reversing and starting a new descending impulse. In this case, the downside target may be the support level at 0.7110. After testing the level, the price may break it and continue the descending tendency. At the same time, an opposite scenario implies that the price may correct to reach 0.7230 before resuming the downtrend.

USDCHF, “US Dollar vs Swiss Franc”

As we can see in the H4 chart, after testing the resistance area, the pair has formed a Harami reversal pattern. At the moment, USDCHF may reverse in the form of a new descending impulse. In this case, the downside target may be at 0.9550. After testing the support level, the price may rebound from it and resume trading upwards. Still, there might be an alternative scenario, according to which the asset may grow to reach 0.9635 without any pullbacks.

Article By RoboForex.com

Financial News Forex and Currency News

25 Apr

RoboMarkets Cleared Out a Limassol Park

RoboMarkets, a European broker working with European clients, announces the holding of an ecological event that took place on Saturday 16 April 2022. The initiative group of the RoboMarkets team went outside to clear out the Garyllis River Linear Park. The event was held with the support of the local authorities and featured the mayor of Limassol.

Last weekend, over a hundred of RoboMarkets employees and their family members gathered at the Monument of the Volunteer in Limassol to clear out one of the biggest green areas in the city, the Garyllis River Linear Park. The company team got into several groups and in three and a half hours cleared out the 5-kilometre park grounds, collecting over 300 bags of rubbish. After the event, the company staff and their loved ones had a photoshoot with municipal officials and the mayor of Limassol and then went to a special brunch to summarise the results of their work.

Denis Golomedov, Chief Marketing Officer at RoboMarkets comments on the event: “We at RoboMarkets believe that preserving the environment is a great and responsible initiative for the benefit of the city where we live and work. No matter how big or small the area you’ve cleared out is, you do your part and it’s a really big deal”.

“It’s really important for us to contribute, to do something beneficial to society – it’s one of the company’s values. We’re very happy to be here today and I think RoboMarkets will hold such events more often. It’s a great opportunity for our employees to have a good time outside work and, at the same time, take part in preserving the environment of the city we all live in”. – adds Konstantin Rashap, Chief Business Officer at RoboMarkets.

Limassol’s local authorities expressed their gratitude to RoboMarkets for this initiative. They especially focused on teamwork and commitment, which is quite rare when it comes to the involvement of businesses in social activities. They also expressed interest in further cooperation on social events important for the nature and people of Cyprus.

About RoboMarkets

RoboMarkets is an investment company with the CySEC license No. 191/13. RoboMarkets offers investment services in many European countries by providing traders, who work on financial market, with access to its proprietary trading platforms. More detailed information about the Company’s products and activities can be found on the official website at www.robomarkets.com.

Financial News Forex and Currency News

25 Apr

The Analytical Overview of the Main Currency Pairs on 2022.04.25

by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0834
Prev Close: 1.0796
% chg. over the last day: -0.35%

US manufacturing growth accelerated in March as robust demand and improved forecast countered negative cost pressures. Economic growth in the Eurozone accelerated in April as a rebound in the services sector helped offset stagnant manufacturing output. Business expectations in Europe for next year increased from a 17-month low. However, confidence remains low as fears of the war in Ukraine, rising prices, and the lingering effects of the pandemic are not optimistic.

Trading recommendations

Support levels: 1.0727
Resistance levels: 1.0770, 1.0870, 1.0908, 1.0958, 1.1027, 1.1196, 1.1291

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. Growth in the dollar index led to the fall of the European currency. The MACD indicator has become negative, and the selling pressure has increased. Under such market conditions, it is possible to look for buy trades on intraday timeframes from the support level of 1.0727, but only with short targets and confirmation. Sell trades should be considered from the resistance level of 1.0870 or 1.0908, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0958 resistance level and fixes above, the uptrend will likely resume.

News feed for 2022.04.23:

– Eurozone Germany Ifo Business Climate (m/m) at 11:00 (GMT+2).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3028
Prev Close: 1.2832
% chg. over the last day: -1.52%

UK PMI data showed steady growth in March as further recovery from COVID-19 restraint helped offset the downside. Yet the war in Ukraine has led to unprecedented price increases and reduced business confidence to a year-and-a-half low. The largest increase in selling prices of goods and services in the survey’s history took place in March, and consumer price inflation will continue to rise in the coming months. Analysts predict an undesirable pattern of “stagflation” for the UK economy.

Trading recommendations

Support levels: 1.2719
Resistance levels: 1.2801, 1.2862, 1.2919, 1.2981, 1.3010, 1.3083, 1.3115

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The price fell sharply on Friday amid a likely “stagflationary” scenario for the UK. The MACD indicator has become negative, with no signs of a reversal. Under such market conditions, sell trades should be looked for from the resistance level of 1.2918, but with confirmation. For buy deals, traders may consider the level of 1.2719, but only after the appearance of a bullish initiative and with short targets.

Alternative scenario: if the price breaks down through the 1.3083 resistance level and fixes above, the mid-term uptrend will likely be resumed.

There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 128.33
Prev Close: 128.46
% chg. over the last day: +0.10%

Trading recommendations

Support levels: 126.69, 125.72, 124.66, 124.24, 122.97, 122.63, 121.81
Resistance levels: 128.83, 129.36

The medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator has become inactive, but the divergence is still visible on the higher timeframes. The price is trading in a narrow corridor. Under such market conditions, it is best to look for buy deals, expecting the continuation of the uptrend, but after the price makes a pullback to the average lines and the nearest support levels. First of all, it is worth considering the support level of 126.69, but with additional confirmation. A resistance level of 128.83 may be considered for sell deals, but only with short targets.

Alternative scenario: If the price fixes below 124.66, the uptrend will likely be broken.

There is no news feed for today.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2579
Prev Close: 1.2708
% chg. over the last day: +1.02%

The Canadian dollar is a commodity currency, highly dependent on oil price dynamics and the dollar index. The dollar index on Friday continued to grow amid statements by the Fed officials, while oil prices remained at the same level. As a result, the USD/CAD currency pair also increased. Fundamentally, there are currently no prerequisites for a medium-term trend in USD/CAD.

Trading recommendations

Support levels: 1.2644, 1.2607, 1.2521
Resistance levels: 1.2714, 1.2849

The USD/CAD currency pair is bullish in terms of technical analysis. Buying pressure is still high, but the price has deviated strongly from the average values. The MACD indicator has become positive, with no signs of reversal. Trade is worth it only with short targets. Under such market conditions, it is better to look for buy trades on the lower timeframes from the support level of 1.2607 or 1.2644, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2849, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below 1.2521, the downtrend will likely be resumed.

News feed for 2022.04.25:

– Canada Boc Gov Macklem Speaks at 18:00 (GMT+2).

by JustForex

Financial News Forex and Currency News

23 Apr

Currency Speculators raise their bullish bets for Canadian Dollar to 40-week high

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 19th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Highlighting the COT currency data is the rising of bullish bets in the Canadian ‘Loonie’ dollar currency futures contracts. CAD speculators raised their bullish bets for a fourth straight week this week and for the fifth time in the past six weeks. Over the past four-week time-frame, CAD bets have improved by a total of +26,166 contracts, going from -4,940 net positions on March 22nd to +21,226 net positions this week. These gains have brought this week’s speculator level to the most bullish position since July 13th of 2021, a span of forty weeks.

This recent improvement in Loonie sentiment has been helped out by the hike in interest rates by the Bank of Canada (BOC). The BOC recently pushed its key interest rate higher by 50 basis points on April 13th and has in the past few days hinted that more interest rate rises were to come. The recent inflation numbers out of Canada were above expectations (6.7 percent) and according to Bloomberg, market participants have pushed their odds to 100 percent for another 50 basis point hike in June.

Overall, the currencies with higher speculator bets this week were the US Dollar Index (2,943 contracts), Japanese yen (4,640 contracts), Swiss franc (2,492 contracts), New Zealand dollar (654 contracts), Canadian dollar (9,068 contracts)and the Mexican peso (6,704 contracts).

The currencies with declining bets were the Euro (-7,759 contracts), Brazil real (-1,557 contracts), Australian dollar (-122 contracts), Bitcoin (-361 contracts) and the British pound sterling (-5,860 contracts).

Speculator strength standings for each Commodity where strength index is current net position compared to past three years, above 80 is bullish extreme, below 20 is bearish extreme

Data Snapshot of Forex Market Traders | Columns Legend

Apr-19-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
USD Index	54,524	77	32,580	82	-35,893	15	3,313	53
EUR	675,939	72	31,301	45	-49,726	62	18,425	5
GBP	249,529	70	-58,914	32	72,889	73	-13,975	27
JPY	251,291	90	-107,187	3	129,842	99	-22,655	7
CHF	44,269	20	-11,450	50	23,051	57	-11,601	29
CAD	153,302	32	21,226	68	-39,338	31	18,112	66
AUD	147,309	43	-28,837	58	20,800	34	8,037	72
NZD	41,098	26	365	72	503	31	-868	42
MXN	165,403	33	21,664	37	-26,214	62	4,550	62
RUB	20,930	4	7,543	31	-7,150	69	-393	24
BRL	70,553	68	44,572	94	-47,063	5	2,491	94
Bitcoin	11,276	61	-194	90	-175	0	369	21

US Dollar Index Futures:

The US Dollar Index large speculator standing this week reached a net position of 32,580 contracts in the data reported through Tuesday. This was a weekly lift of 2,943 contracts from the previous week which had a total of 29,637 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 82.0 percent. The commercials are Bearish-Extreme with a score of 15.0 percent and the small traders (not shown in chart) are Bullish with a score of 52.8 percent.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	85.6	3.3	9.5
– Percent of Open Interest Shorts:	25.9	69.1	3.5
– Net Position:	32,580	-35,893	3,313
– Gross Longs:	46,685	1,778	5,198
– Gross Shorts:	14,105	37,671	1,885
– Long to Short Ratio:	3.3 to 1	0.0 to 1	2.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	82.0	15.0	52.8
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-2.5	3.3	-5.8

Euro Currency Futures:

The Euro Currency large speculator standing this week reached a net position of 31,301 contracts in the data reported through Tuesday. This was a weekly lowering of -7,759 contracts from the previous week which had a total of 39,060 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 44.6 percent. The commercials are Bullish with a score of 61.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 4.9 percent.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.7	53.7	11.4
– Percent of Open Interest Shorts:	28.1	61.0	8.7
– Net Position:	31,301	-49,726	18,425
– Gross Longs:	221,003	362,930	76,939
– Gross Shorts:	189,702	412,656	58,514
– Long to Short Ratio:	1.2 to 1	0.9 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	44.6	61.9	4.9
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-8.5	9.7	-10.9

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week reached a net position of -58,914 contracts in the data reported through Tuesday. This was a weekly decrease of -5,860 contracts from the previous week which had a total of -53,054 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 31.6 percent. The commercials are Bullish with a score of 72.8 percent and the small traders (not shown in chart) are Bearish with a score of 26.7 percent.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.8	74.6	8.8
– Percent of Open Interest Shorts:	38.4	45.4	14.4
– Net Position:	-58,914	72,889	-13,975
– Gross Longs:	36,811	186,134	21,987
– Gross Shorts:	95,725	113,245	35,962
– Long to Short Ratio:	0.4 to 1	1.6 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	31.6	72.8	26.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-33.4	28.1	-2.2

Japanese Yen Futures:

The Japanese Yen large speculator standing this week reached a net position of -107,187 contracts in the data reported through Tuesday. This was a weekly lift of 4,640 contracts from the previous week which had a total of -111,827 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 2.9 percent. The commercials are Bullish-Extreme with a score of 99.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 7.4 percent.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	5.1	86.0	8.3
– Percent of Open Interest Shorts:	47.7	34.3	17.3
– Net Position:	-107,187	129,842	-22,655
– Gross Longs:	12,723	216,101	20,761
– Gross Shorts:	119,910	86,259	43,416
– Long to Short Ratio:	0.1 to 1	2.5 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	2.9	99.0	7.4
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-31.6	25.9	-3.8

Swiss Franc Futures:

The Swiss Franc large speculator standing this week reached a net position of -11,450 contracts in the data reported through Tuesday. This was a weekly increase of 2,492 contracts from the previous week which had a total of -13,942 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 50.0 percent. The commercials are Bullish with a score of 56.8 percent and the small traders (not shown in chart) are Bearish with a score of 29.2 percent.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	6.6	71.7	21.7
– Percent of Open Interest Shorts:	32.4	19.6	47.9
– Net Position:	-11,450	23,051	-11,601
– Gross Longs:	2,900	31,735	9,599
– Gross Shorts:	14,350	8,684	21,200
– Long to Short Ratio:	0.2 to 1	3.7 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	50.0	56.8	29.2
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-3.0	1.3	1.8

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week reached a net position of 21,226 contracts in the data reported through Tuesday. This was a weekly advance of 9,068 contracts from the previous week which had a total of 12,158 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 67.7 percent. The commercials are Bearish with a score of 31.1 percent and the small traders (not shown in chart) are Bullish with a score of 65.8 percent.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.7	45.0	24.6
– Percent of Open Interest Shorts:	14.9	70.7	12.8
– Net Position:	21,226	-39,338	18,112
– Gross Longs:	44,063	68,989	37,784
– Gross Shorts:	22,837	108,327	19,672
– Long to Short Ratio:	1.9 to 1	0.6 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	67.7	31.1	65.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	13.4	-17.2	20.4

Australian Dollar Futures:

The Australian Dollar large speculator standing this week reached a net position of -28,837 contracts in the data reported through Tuesday. This was a weekly decline of -122 contracts from the previous week which had a total of -28,715 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 58.1 percent. The commercials are Bearish with a score of 34.4 percent and the small traders (not shown in chart) are Bullish with a score of 72.0 percent.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.6	53.8	19.2
– Percent of Open Interest Shorts:	46.2	39.6	13.7
– Net Position:	-28,837	20,800	8,037
– Gross Longs:	39,201	79,208	28,257
– Gross Shorts:	68,038	58,408	20,220
– Long to Short Ratio:	0.6 to 1	1.4 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	58.1	34.4	72.0
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	45.8	-42.8	19.6

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week reached a net position of 365 contracts in the data reported through Tuesday. This was a weekly boost of 654 contracts from the previous week which had a total of -289 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 71.9 percent. The commercials are Bearish with a score of 31.2 percent and the small traders (not shown in chart) are Bearish with a score of 41.9 percent.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	46.4	45.9	6.8
– Percent of Open Interest Shorts:	45.5	44.6	8.9
– Net Position:	365	503	-868
– Gross Longs:	19,081	18,853	2,797
– Gross Shorts:	18,716	18,350	3,665
– Long to Short Ratio:	1.0 to 1	1.0 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	71.9	31.2	41.9
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	21.4	-20.2	4.0

Mexican Peso Futures:

The Mexican Peso large speculator standing this week reached a net position of 21,664 contracts in the data reported through Tuesday. This was a weekly advance of 6,704 contracts from the previous week which had a total of 14,960 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 36.6 percent. The commercials are Bullish with a score of 61.9 percent and the small traders (not shown in chart) are Bullish with a score of 62.3 percent.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	44.6	50.0	4.7
– Percent of Open Interest Shorts:	31.5	65.8	1.9
– Net Position:	21,664	-26,214	4,550
– Gross Longs:	73,710	82,643	7,701
– Gross Shorts:	52,046	108,857	3,151
– Long to Short Ratio:	1.4 to 1	0.8 to 1	2.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	36.6	61.9	62.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-13.4	12.1	10.1

Brazilian Real Futures:

The Brazilian Real large speculator standing this week reached a net position of 44,572 contracts in the data reported through Tuesday. This was a weekly fall of -1,557 contracts from the previous week which had a total of 46,129 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 94.2 percent. The commercials are Bearish-Extreme with a score of 5.4 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 94.0 percent.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	76.2	17.6	6.1
– Percent of Open Interest Shorts:	13.1	84.3	2.5
– Net Position:	44,572	-47,063	2,491
– Gross Longs:	53,790	12,399	4,272
– Gross Shorts:	9,218	59,462	1,781
– Long to Short Ratio:	5.8 to 1	0.2 to 1	2.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	94.2	5.4	94.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-5.8	5.4	5.0

Bitcoin Futures:

The Bitcoin large speculator standing this week reached a net position of -194 contracts in the data reported through Tuesday. This was a weekly decline of -361 contracts from the previous week which had a total of 167 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 90.2 percent. The commercials are Bearish with a score of 27.4 percent and the small traders (not shown in chart) are Bearish with a score of 21.3 percent.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	73.3	3.6	10.2
– Percent of Open Interest Shorts:	75.0	5.2	7.0
– Net Position:	-194	-175	369
– Gross Longs:	8,263	408	1,155
– Gross Shorts:	8,457	583	786
– Long to Short Ratio:	1.0 to 1	0.7 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	90.2	27.4	21.3
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-9.8	19.8	4.8

Article By InvestMacro – Receive our weekly COT Reports by Email

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

CountingPips Forex Blog Forex and Currency News investing Opinions

22 Apr

Forex Technical Analysis & Forecast 22.04.2022

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

EURUSD has rebounded from 1.0930; right now, it is falling towards 1.0801. After that, the instrument may correct to reach 1.0866 and then start a new decline with the target at 1.0686.

GBPUSD, “Great Britain Pound vs US Dollar”

Having rebounded from 1.3086, GBPUSD is trading downwards to reach 1/2950. Later, the market may start a new correction towards 1.3022 and then resume falling with the target at 1.2930.

USDJPY, “US Dollar vs Japanese Yen”

After finishing the correctional wave at 128.60, USDJPY is expected to consolidate below this level. Later, the market may break the range to the downside and start another decline with the target at 127.44.

USDCHF, “US Dollar vs Swiss Franc”

Having rebounded from 0.9457, USDCHF is growing towards 0.9560. After that, the instrument may start another correction with the target at 0.9422.

AUDUSD, “Australian Dollar vs US Dollar”

After completing the correctional wave at 0.7465 along with the descending structure towards 0.7373, AUDUSD has formed a new consolidation range there. Possibly, today the pair may break the range to the downside and resume moving downwards with the target at 0.7300.

BRENT

After forming a new consolidation range around 108.33, Brent is expected to break it upwards and form one more ascending wave to reach 111.77. Later, the market may correct towards 108.55 and then resume moving within the uptrend with the target at 117.00.

XAUUSD, “Gold vs US Dollar”

Gold has completed the correctional wave at 1936.40; right now, it is consolidating above this level. If later the price breaks this range to the upside, the market may start another growth towards 1962.68 and then form a new descending structure to reach 1929.00. After that, the instrument may resume trading upwards with the target at 2025.00.

S&P 500

Having rebounded from 4513.0 and finished the descending wave at 4363.0, the S&P index is consolidating above this level. Possibly, the asset may break the range to the downside and resume trading downwards with the target at 4220.0 or even extend this structure down to 4139.0.

Article By RoboForex.com

Financial News Forex and Currency News

22 Apr

The Analytical Overview of the Main Currency Pairs on 2022.04.22

by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0847
Prev Close: 1.0831
% chg. over the last day: -0.15%

The annual consumer price index in Europe unexpectedly declined in April from 7.5% to 7.4%. At the same time, the core inflation rate, which excludes food and energy prices, fell from 3.0% to 2.9%. The euro jumped sharply yesterday on this data. But after Jerome Powell’s speech, the euro fell again. Analysts believe that the ongoing war in Ukraine will continue to cause energy and food prices to rise, which will eventually lead to higher inflation in the region. European Central Bank President Christine Lagarde said the ECB may have to cut its growth forecast even further as the effects of Russia’s invasion of Ukraine take a toll on households and businesses.

Trading recommendations

Support levels: 1.0835, 1.0800, 1.0772
Resistance levels: 1.0870, 1.0907, 1.0958, 1.1027, 1.1196, 1.1291

From the technical point of view, EUR/USD currency pair trend on the hourly time frame is bearish. But against the backdrop of a decrease in the rate of inflation, buyers of the European currency appeared. The MACD indicator has become inactive. Under such market conditions, it is possible consider buy trades on intraday timeframes from the support level of 1.0800, but only with short targets and confirmation. Sell trades should be considered from the resistance level of 1.0870 or 1.0907, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0958 resistance level and fixes above, the uptrend will likely resume.

News feed for 2022.04.22:

– German Manufacturing PMI (m/m) at 10:30 (GMT+3);
– Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
– Eurozone ECB President Lagarde Speaks at 16:00 (GMT+3);
– US Manufacturing PMI (m/m) at 16:45 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3049
Prev Close: 1.3026
% chg. over the last day: -0.17%

According to Bank of England Governor Andrew Bailey, governments should be prepared to accept economic hardship as payment for forcing Russia to end the war in Ukraine. Skyrocketing energy prices and supply chain problems since the war began in February are exacerbating declining incomes and threatening the deepest cost-of-living crisis in Britain since the 1950s. According to Bailey, the Bank of England is balancing between fighting inflation and preventing economic growth from falling. The governor also expressed concern about rising food prices and wondered if the UK labor market would slow in the event of a recession, as staff shortages are still very acute.

Trading recommendations

Support levels: 1.3011, 1.2993
Resistance levels: 1.3094, 1.3115, 1.3147, 1.3244, 1.3274

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The MACD indicator has become inactive, the price pullback to the moving averages. Under such market conditions, sell trades should be looked for from the resistance level of 1.3094, but with confirmation. For buy deals, traders may consider the level of 1.3011, but only after the appearance of a bullish initiative and with short targets.

Alternative scenario: if the price breaks down through the 1.3147 resistance level and fixes above, the mid-term uptrend will likely be resumed.

News feed for 2022.04.22:

– UK Retail Sales (m/m) at 09:00 (GMT+3);
– UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
– UK BoE Gov Bailey Speaks at 17:30 (GMT+3).

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 127.93
Prev Close: 128.38
% chg. over the last day: +0.35%

Japan’s nationwide consumer price index was 0.8% y/y (previous 0.6%). The ultra-soft policy of the Bank of Japan contributes to the growth of inflation towards the target of 2%, but the growth rate is extremely low. At the moment many analysts believe that a sharp decline in the yen will have a far more negative impact on the economy than the country’s low inflation rate. The Bank of Japan on Wednesday entered the government bond market and carried out a number of operations to prevent the yield from rising above the 0.1% mark. Thus, a technical correction in USD/JPY can be expected in the near future.

Trading recommendations

Support levels: 126.69, 125.72, 124.66, 124.24, 122.97, 122.63, 121.81
Resistance levels: 128.84, 129.36

The medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator has become inactive, but the divergence is still visible on the higher timeframes. The price is trading in a narrow corridor. Under such market conditions, it is best to look for buy deals, expecting the continuation of the uptrend, but after the price makes a pullback to the average lines and the nearest support levels. First of all, it is worth considering the support level of 126.69, but with additional confirmation. A resistance level of 128.84 may be considered for sell deals, but only with short targets.

Alternative scenario: If the price fixes below 124.66, the uptrend will likely be broken.

News feed for 2022.04.22:

– Japan National Core Consumer Price Index at 02:30 (GMT+3).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2498
Prev Close: 1.2582
% chg. over the last day: +0.67%

The Canadian dollar is a commodity currency, and is highly dependent on the dynamics of oil prices and the dollar index. The dollar index jumped sharply yesterday in the background of the statements of the Federal Reserve System officials, while oil prices remained at the same level. As a result, the USD/CAD currency pair rose sharply. At the moment, there are no fundamental prerequisites for a medium-term trend.

Trading recommendations

Support levels: 1.2509, 1.2467
Resistance levels: 1.2600, 1.2644, 1.2713, 1.2754, 1.2851

The USD/CAD currency pair is bullish in terms of technical analysis. The price rebounded sharply from the priority change level, the buyers defended their positions. The MACD indicator has become positive, with no signs of reversal. Trade is worth it only with short targets. Under such market conditions, it is better to look for buy trades on the lower timeframes from the support level of 1.2509, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2600 or 1.2645, but it is also better with confirmation.

Alternative scenario: if the price breaks through and consolidates below 1.2467, the downtrend will likely be resumed.

News feed for 2022.04.22:

– Canada Retail Sales (m/m) at 15:30 (GMT+3).

by JustForex

Financial News Forex and Currency News

22 Apr

Why is the Yen so weak?

By Han Tan Chief Market Analyst at Exinity Group

– Two words: policy divergence (read on to find out more).

But first, let’s take a look at just how dismal the Yen’s performance has been so far in 2022.

The Japanese Yen is now trading around a 20-year low against the US dollar.

Last Tuesday, USDJPY posted its biggest single-day climb since November 2020, only to then take a breather for the time being.

^{(Note: weaker Yen versus the US dollar = USDJPY climbs higher).}

FUN FACT: The last time USDJPY traded at these levels just below 130, Eminem had just released his hit 2002 track, “Without Me”.

In fact, JPY is the worst performer against the US dollar amongst all G10 currencies … by far.

And the Yen’s woes aren’t just limited to its performance against the US dollar alone.

Consider how the JPY Index has weakened by almost 9% so far this year.

Note that the index shown above comprises a basket of currency pairs measuring the Yen against its G10 peers, all in equal weights:

The Yen also has a year-to-date decline against all its major Asian counterparts as well.

So why is the Yen so weak?

The main reason is because of monetary policy divergence.

Let’s break it down.

Firstly, monetary policy is the way a central bank achieves its goals for the economy (e.g. maximum employment, stable prices, etc.), using tools like interest rates, money supply, and even currency levels.

And where’s the divergence?

The Bank of Japan is still using its monetary policy to support its economy.

This is in stark contrast to what most other central banks around the world are doing = pulling back that support. They do this by raising interest rates/easing back on bond purchases.

The goal of such policy-tightening (not what the BOJ is doing) is to reduce money supply and demand levels in an economy = less money chasing after scarce goods = to lower consumer prices/inflation.

Monetary policy: Comfort food vs. a regular diet

Consider when a child is feeling down, his/her parents may have no qualms treating the child to some ice cream, candy, or chocolate bars.

Such sweet indulgences are meant to make the child feel better in a jiffy, but is (hopefully) just a short-term fix and also (again, hopefully) far different from the regular diet the child consumes as part of the daily routine.

Similarly, when the economy was suffering during the pandemic, central banks rolled out record-low interest rates and printed money out of thin air to keep financial markets supported.

Low interest rates = cheaper for households/businesses to borrow money = they have money to spend in the economy = the economy gets better

But now that economies are recovering and even posting red-hot inflation numbers, they no longer need record-low interest rates and unlimited bond purchases

Hence, central banks are returning to their economy’s “regular diet” by tightening policy = paring down bond purchases/reducing the supply of money in the economy/raising interest rates.

Who’s already hiking rates?

Within the G10 space alone:

Bank of New Zealand – raised its benchmark rate by 125 basis points (1.25%) since Q3 2021
Bank of Canada – raised its benchmark rate by 75 basis points so far this year
Bank of England – raised its benchmark rate by 65 basis points since December
US Federal Reserve – raised rates by 25 basis points in March, perhaps another 50-basis point hike in May

But not so the Bank of Japan.

It’s keeping Japan’s benchmark interest rate at a record low of negative 0.1%, while buying up even more bonds.

Hence, the divergence in monetary policy.

How is policy divergence playing out in markets?

This divergence is evident in the widening gap in yields between Japanese bonds and its global counterparts.

Firstly, what are yields?

Yields are a way to measure how much money you could earn on an investment over a set period of time.

In the case for bonds, it’s calculated in terms of how much interest one would get paid if they held on to that bond till it matures/reaches the end of its tenure.

For context, bond yields have been climbing around the world.

This is because investors are selling off bonds in tandem with central banks that are reducing their balance sheets.

And when bond prices drop, their yields rise.

Here are the benchmark 10-year yields for these other countries (at the time of writing):

US = 2.88%
Canada = 2.87%
China = 2.82%
UK = 1.95%
Germany = 0.89%

Contrast the numbers above with Japan’s 10-year yields, which are capped at 0.25%.

As a policy, the Bank of Japan is buying even more bonds to keep bond prices elevated and limit its benchmark 10-year yields to no higher than 0.25% (this process is also known as “yield curve control”).

The goal for capping those yields is to keep borrowing costs low in Japan so that households/businesses can still borrow to stimulate the economy.

^{Government bond yields are often used as the benchmark by which other banks/financial institutions calculate the interest to charge the customers who borrow money.}Here are two charts that show how the widening gap/spread between US benchmark yields vs. Japan’s benchmark yields (10-year government bonds) correspond with the USDJPY’s performance:

See how those two lines are moving in sync with one another?

In essence, the wider the gap between US and Japan’s yields, the higher USDJPY goes (the weaker the Japanese Yen against the US dollar).

How are Japan’s capped yields affecting the yen?

The lower yields on offer in Japan suggests that investors would get more bang for their buck by buying bonds in other countries that are now posting higher yields (again, yields in this case are a measure of how much one could earn from investing in that particular bond).

At risk of oversimplifying matters:

Less demand for Japanese assets = less demand for the Japanese yen.
And when there’s lower demand = prices fall (all else equal).

Hence, the Yen has been falling as investors shun Japanese bonds.

From a fundamental perspective, markets are getting the sense that the Japanese economy is still too fragile – or at least the Bank of Japan thinks so of its own economy – and is nowhere near strong enough to be able to do without the ‘comfort food’ from the central bank.

But of course all that could change, as the BOJ faces increasing pressure to follow suit with other central banks in tightening policy … or perhaps even just to stem the Yen’s weakness.

Which brings us to this final point …

Will the Yen eventually rebound?

As a market cliche goes … nothing lasts forever.

So yes, theoretically the Yen could eventually rebound.

But one of two things may need to happen first:

1) The Bank of Japan has to signal that its willing to abandon its ultra-loose monetary policies.

Policymakers need to be convicted that Japan’s economic recovery is sustainable, and that inflation is being fuelled by robust demand (a.k.a. demand-pull inflation) as opposed to cost-push inflation.

To be clear, this seems unlikely for a while more, at least through the end of 2022.

Still, look out for the Bank of Japan policy meeting next week (April 28th).

The slightest clue that the BOJ is ready to tweak its policy stance could trigger a big move in the Yen.

2) Policymakers intervene to curb Yen weakness

This has been done before, but not for quite some time.

The last time the Japanse government propped up the yen was back in 1998, when USDJPY traded above 140 and peaked at 147.66 in September 1998.

However, back in 2002 even when USDJPY surpassed 135, the government sat on its hands and didn’t intervene.

So it remains to be seen at what level Japanese policymakers will tolerate before trying to stop the Yen from weakening further.

Keep in mind that a drastically-weaker Yen causes its own problems for the economy.

Japan is a net importer of energy, which are widely denominated in US dollars. The weaker Yen forces Japan to spend more of its currency to buy the same amount of fuel, not to mention the other imported goods (e.g. food) and services that it now has to spend more money on. If the imported costs become too great and weigh on businesses/households, then the Japanese government may be forced to pay for subsidies to ease the pain. That’s money out of the Japanese government’s pocket that could be spent on other things.

So until either of the above scenarios happen, shorting the Yen has remained a popular bet.

Last week, asset managers raised their short bets on the Yen to the most ever on record, according to CFTC data.

Overall, as long as this policy and yields divergence continues to play out between Japan and other major economies, that’s likely to keep the Yen on its weakening path for longer.

That is, unless the BOJ or Japan’s Finance Ministry switches tact and, in intervening to halt the Yen’s weakness, might do so while dropping bars from Eminem’s monster hit from 2002 …

“Now this looks like a job for me
So everybody, just follow me
‘Cause we need a little, controversy
‘Cause it feels so empty, without me”

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

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