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Greenback Recovers Early Declines, USDJPY Trend Remains North

  • A more positive tilt to risk sentiment and bolstered global equity indices prompted further significant pressure on the Japanese Yen on Tuesday. USDJPY’s firm bounce following the BOJ meeting last Friday has extended and the pair’s trend needle continues to point North.
  • Cycle highs at Y135.59 have been broken momentum buying through the break level has seen USDJPY print as high as 136.45, now residing at its highest level since 1998. The pair remains in close proximity of the day’s best levels as we approach the APAC crossover. With a number of resistance points being breached, the next focus technically will be on 137.30, the 1.50 Fibonacci projection of the Feb 24 - Mar 28 - 31 price swing.
  • Naturally cross/JPY has seen some significant gains, with the likes of AUDJPY and CADJPY up close to 1.5%, capitalising on the improved risk environment.
  • Early risk on also placed the US dollar on the backfoot, with the DXY trading down roughly half a percent approaching the US open. However, a slow grinding recovery sees the Index now trading at close to unchanged levels for the session.
  • The better bid greenback weighed on a previously perky Euro, which saw EURUSD fall from a 1.0582 intra-day peak back down to around 1.0530/40 as of writing.
  • NZD shows relative underperformance on the back of a quarterly Westpac Survey showing that consumer confidence in New Zealand tumbled to a record low. CAD (+0.43%) outperforms following a decent set of April retail sales data that came in above estimates, underpinning the loonie.
  • Coming up during Wednesday’s APAC session will be NZ trade data as well as the BOJ minutes from the June meeting. Focus will then turn to CPI data from both the UK and Canada before Fed Chair Jerome Powell is due to testify on the Semi-Annual Monetary Policy Report before the Senate Banking Committee.

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