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Greenback Rally Extends, USDJPY Highest Since November

FOREX
  • The greenback spent Thursday building upon its most recent strong performance, with a notable 0.70% advance for the USD index. Gains were broad based against all others in G10 as further optimism for a debt ceiling deal underpin the dollar bid. Furthermore, hawkish remarks Dallas Fed Pres Logan put pressure on the global short-end, adding an additional tailwind for the greenback.
  • The pressure on front-end yields has boosted USDJPY to fresh highs this year and with the powerful break a key resistance zone between 137.77-91 strengthens bullish conditions and confirms a resumption of the uptrend that started on Jan 16. The pair trades just below session highs of 138.69 approaching the APAC crossover, the best levels since November 2022. The focus above is on 139.00 and 139.59, a Fibonacci retracement.
  • In similar vein, EURUSD continues to weaken and Thursday’s move lower marks an extension of the bear leg that started on Apr 26. Price action has narrowed the gap with 1.0713, the Mar 24 low.
  • USDCNH (+0.64%) has extended the move higher this week, confirming a resumption of the bull trend that started mid-January. This week’s breach of key resistance at 6.9971, the Mar 8 high, represents an important bullish short and medium-term price development.
  • The pair is approaching the neckline of a former head and shoulders reversal pattern. The line intersects at 7.0655 and if this level is breached, it would signal scope for a climb further out towards the top of a bull channel that is drawn from the Feb 2 low. The channel top intersects at 7.1313 today. Initial support lies at 6.9971 and 6.9425, the 20-day EMA.
  • Canadian retail sales headlines a quiet Friday global docket, however, markets will remain attentive to any comments from Fed Chair Powell, due to participate in a panel discussion with Ben Bernanke.
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