USDJPY reached 137.25, the lowest level since May 17, during the morning session in Tokyo, indicating a stronger yen against the US dollar. However, the dollar saw some buying interest and managed to recover to the 138 yen range. The dollar’s strength has been adjusting amid the slowing growth in US inflation and expectations that rate hikes may come to a halt after the upcoming FOMC meeting this month. The rise of the euro and the pound, driven by expectations of multiple rate hikes, has also weighed on the overall strength of the dollar. However, concerns about recent volatile movements and the continuation of rate hike expectations this month have prompted some adjustments ahead of the weekend, with the added factor of Tokyo markets being closed on Monday.
While there is ongoing caution regarding the weakness of the dollar in the market, there is also a growing sense of caution about aggressive selling pressure. The key focus is likely to be on the movement around the 138 yen level. In the medium term, there is a strong awareness of a downward bias, and selling pressure is expected to emerge from the latter half of the 138 yen range.
EURUSD, which remained cautious about buying above 1.10 after a solid move into the 1.12 range yesterday, is now showing signs of catching up with buyers as the market moves towards the lower 1.11 range.
There are no significant scheduled indicators today, but the University of Michigan Consumer Sentiment Index, which often shows noticeable deviations from market expectations, should be watched closely. If it demonstrates weakness significantly below expectations, there is a possibility of renewed selling pressure on the dollar.
Yesterday, I went long on CHFJPY and GBPJPY, expecting a rebound in USDJPY around the 138.00 level, but unfortunately, the positions experienced a significant downturn, resulting in all positions being stopped out.
However, currently, the yen is weakening again, and both GBPJPY and CHFJPY are experiencing substantial rebounds. It seems that the timing was a bit early.
Today, I anticipate significant developments after the release of the University of Michigan Consumer Sentiment Index. I will be watching closely to follow the market’s direction from here.