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Greenback Consolidates Strong Weekly Gains, JPY Pressure Continues

FOREX
  • Despite some early weakness on Friday, the greenback was well supported following a set of strong US data and the USD index looks set to consolidate solid 1% gains on the week.
  • Continuing the similar themes from prior sessions, the New Zealand Dollar and the Japanese Yen are the weakest across G10. Kiwi weakness continues to stem from the dovish RBNZ and the higher US yields continue to exacerbate the widening yield differentials that have underpinned Cross/JPY longs.
  • USDJPY in particular has established itself back above the 140.00 handle with initial resistance (bull channel top drawn from the Jan 16 low) around 140.70 capping the price action for now. The next obvious target for the move resides at 141.61, the Nov 23 2022 high.
  • Elsewhere, performance across G10 was mixed with the likes of the GBP, AUD and CNH benefitting from more buoyant stock markets on the back of greater optimism over the debt ceiling heading into an extended holiday weekend.
  • Bearish conditions for EURUSD have been reinforced and the 1.0713 objective was briefly breached, the Mar 24 low. This signals scope for an extension towards 1.0653 next, a Fibonacci retracement point.
  • Holidays across Europe and the US should keep currency markets subdued on Monday. Looking forward, inflation readings across Europe and Australia will be in focus as well as manufacturing and non-manufacturing data from China. The week will be highlighted by an important jobs report from the US on Friday.
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