Forex Top Team

The dollar-yen pair is at a high level for the first time in 5 years and 2 months, exploring the possibility of a further rise.

The dollar-yen pair has been gaining momentum since the latter half of last week. For a while, transactions at familiar levels centered around the 115 yen level have continued, but they are renewing the level to 116 yen, 117 yen, and 118 yen every day. At the moment, the pair is solidifying in the low 118 yen range, and it is moving to look in the latter half of the 118 yen range.

The market consensus is the start of rate hikes at the US FOMC meeting to be held today. Before the Ukrainian crisis, it was expected that the interest rate would rise by 0.5% at a stretch in view of inflation trends, but due to the uncertainties about the economic outlook due to economic sanctions, the market has raised interest rates by 0.25% this time. The view was calm. However, from the next time onward, it seems necessary to raise interest rates by 0.50% again depending on inflation trends. If the view that the interest rate rises by 0.25% each time is established in the market, the market will always be ahead of the curve. It should be noted that the effect of the rate hike will diminish.

For the time being, attention will be paid to the sustainability of the dollar-yen rise after the announcement of the FOMC tomorrow. Normally, it is the timing when it is easy to make profits and adjust positions as the end of the event. However, looking at the recent cross-yen trend, the depreciation of the yen is deep-rooted despite the risk of an emergency. Euroyen is moving to try the 130 yen mark. There seems to be a side to support the dollar-yen exchange rate from the aspect of yen depreciation.

Speaking of yen depreciation, risk appetite comes to mind. Certainly, there seems to be some who see it as a proactive yen selling pressure in the hope that the situation in Ukraine will improve. On the other hand, what about the bad yen depreciation? Inflationary pressures are likely to prolong and intensify, with rising energy prices and rising food prices. Japan’s trade balance has changed to a deficit, and recently the current account has become in the red. There seems to be a situation where yen buying in actual demand loses to yen selling.

The timeline of the talk was confusing, but in the short term, the start of the rate hike at the US FOMC in March, the expectation of the next big rate hike, the expectation of a turnaround in the situation in Ukraine, and the change in the constitution of the Japanese economy in the longer term are the factors for the depreciation of the yen. It will be noticed. The immediate meditation of the dollar / yen is the January 2017 high of 118.60 level and the December 2016 high of 118.66 level. After that, the psychological level of just 120 yen and the February 2016 high of 121.49 level became the points.

The dollar-yen pair has risen to the 118-yen level without any squeeze. I was looking at buying dollars and yen this week, but I couldn’t buy it and it went up.

Currently in the adjustment stage ahead of tomorrow’s FOMC. Where to go if there is something to buy after the FOMC.

Basically, the USD buying perspective has not changed.

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