The bid tone around the US dollar keeps growing bigger in the European session, now pushing the USD/JPY pair towards the 110 handle. What more does this 1 May USDJPY Fundamental Drivers Analysis discuss?
1 May, OctaFX – As of writing, the spot trade at the highest levels in twelve weeks near 109.65 levels, up +0.30% on the day. Meanwhile, the US ISM manufacturing PMI is eagerly awaited for fresh trading opportunities.
USD bulls remain unstoppable
The USD bulls are extending control on the back of a rally in Treasury yields, as markets remain expectant of fresh hints on a June Fed rate hike when the FOMC meets later today to discuss the monetary policy, with the outcome due to be announced tomorrow. The chances of a June Fed rate hike are bumped to 92%, in the wake of better US growth prospects and higher inflation expectations.
On the JPY-side of the story, the Bank of Japan’s (BoJ) steady policy course added to the upside in the USD/JPY pair, as the JPY bulls remained unimpressed by the tweak in the central bank’s price target goal.
In the day ahead, the US ISM manufacturing PMI figures could offer fresh trading impetus to the dollar trades, as the main event risk is likely to be the FOMC decision and payrolls data.
1 May USDJPY Fundamental Drivers Analysis
Jim Langlands at FX Charts notes:
“A move above the current trend high of 109.52 would find offers at 109.65, which should be strong resistance if we see it, and then at 110.00 ahead of 110.25, which should also be strong if/when we get there. Further out, as we said before, note the reverse SHS formation, with the neckline at 107.85, suggests a target at somewhere near 110.70.”
“On the downside, buyers will again be seen today at 108.95/00, which should be reasonable support, and then at 108.80 ahead of the 24 April low of 108.53, although that remains some way off, and trading from the long side is again preferred; today looking for dips towards 108.80/50, with a SL placed under 108.40,”
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