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USD Index Recovers 1%, JPY Continues Post-BOJ Selling

FOREX
  • The greenback traded on a much surer footing on Friday, with the USD Index reversing the majority of the dollar downtick seen Thursday.
  • Initial weakness in equities extended the supportive USD price action during NY trade, weighing on the likes of the Euro and GBP. EURUSD faded to 1.0445 during this period, however, caught a bid as equities regained their poise approaching the close and looks to settle just south of 1.05.
    • On the tech front – indicators remain bearish and the recent reversal lower signals a resumption of the primary downtrend with attention remaining on 1.0350, May 13 low.
  • Following the BoJ rate decision overnight, JPY is the weakest currency in G10 as the central bank doubled down on their easy policy stance, effectively allowing markets to resume the selling pressure on the JPY. USDJPY printed 135.43, nearly 400 points above Thursday’s lows, before pulling back slightly into the close around the 135.00 mark.
    • This week reinforces the bull trend and maintains the positive price sequence of higher highs and higher lows. Moving average studies also point north, reinforcing bullish conditions. The focus is on the 136.04, a Fibonacci projection.
  • Risk sentiment remained shaky with initial downward pressure on global equity futures and a persistent grind lower in crude futures amid oil demand concerns. As a result, AUD (-1.62%) continues to slide, putting AUD/USD firmly below the $0.7000 handle. Additionally, AUDNZD has broken a couple of previous lows at 1.1033 exacerbating the relative AUD underperformance.
  • On Monday, US holiday for Juneteenth National Independence Day. Despite a quiet data calendar, there may be potential comments from ECB’s Lagarde and Lane. Additionally, BOE’s Mann Panels an MNI Connect Event. Also Fed’s Bullard is due to discuss inflation and interest rates.
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