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On March 6th, Elmar Voelker of LBBW stated in a report that the outlook for the Eurozone government bond market in the coming weeks will be primarily determined by geopolitical developments and their impact on inflation. The senior fixed-income analyst said, "The outbreak of war in the Middle East has brought inflation back into focus." He noted that long-term inflation expectations in the Eurozone interest rate market have seen a significant upward jump. Voelker stated that while current volatility is relatively mild compared to the energy price crisis of 2022-23, "further price spikes could shake the anchor of inflation expectations and trigger a more lasting shift in sentiment in the bond market."On March 6, a spokesperson for the Ministry of Commerce, in response to a reporters question regarding the EUs Industrial Accelerator Act, stated that China believes the EUs actions, under the pretext of developing relevant EU industries and promoting green transformation, are nothing short of counterproductive. They involve erecting walls and engaging in protectionism, which not only undermines rules and fair competition but also disrupts the stability of global supply chains. Practice has proven that protectionism does not enhance competitiveness; openness and cooperation are the right path to development. China and the EU are important economic and trade partners, sharing broad common interests and positive cooperative achievements in addressing climate change and promoting green transformation. We urge the EU to take the lead in abiding by WTO rules and return to a path of fair, transparent, and non-discriminatory cooperation as soon as possible, rather than going further down the path of rule-breaking and protectionism. China will closely monitor the relevant legislative process, carefully assess its impact on Chinas interests, and resolutely safeguard the legitimate rights and interests of Chinese enterprises.The Israeli military has issued an order for residents to evacuate from an industrial zone in Qom, Iran.A German government spokesperson said that a decision on the Future Combat Air System (FCAS) project will be made in the coming weeks.Hungary says it will deport detained Ukrainians on Friday.

The USD/JPY Currency Pair Swings in a 60-Pip Range as Bulls Reclaim 124.00 on a Positive Note

Drake Hampton

Apr 08, 2022 10:07

Tips

  • The USD/JPY is up 1.26 percent this week.

  • The greenback strengthens as investors shrug off geopolitical concerns.

  • Forecast for the USD/JPY Exchange Rate: As bulls, we are leaning upward and are aiming for the YTD high of 125.10.

 

As the Asian Pacific session opens, USD/JPY pair extends its weekly gains on broad US dollar strength. The USD/JPY remains strong at 124.15, after trading in a tight 55-pip range over the last three days as the Eastern Europe conflict between Russia and Ukraine enters its sixth day.

 

Asian market futures continue to trade higher, despite the ongoing Russia-Ukraine confrontation. Contrary to the positive tone of Asian market futures, which point to a stronger open, US equities concluded the afternoon in a divided mood. Investors shrugged aside Russia-Ukraine tensions on Thursday, despite Russian Foreign Minister Sergei Lavrov's complaint that Ukraine's new draft accord submitted to Russia does not meet Russia's demands on Crimea and Donbas. Meanwhile, recent reports indicate that Russia is regrouping soldiers in preparation for another offensive aimed at reclaiming Ukraine's eastern territories, Donetsk and Luhansk.

 

The North American session on Thursday featured Fed speakers, lead by St. Louis Fed President James Bullard, who stated that the Fed is still behind the curve in its efforts to contain inflation. Bullard said that by the second half of the year, he would like to see the Federal Funds Rate (FFR) at 3.5 percent.

 

Later that day, Chicago Fed President Charles Evans indicated that "we (the Fed) will reach neutral by the end of this year or early next."

 

On the Japanese docket, the Current Account for February and Consumer Confidence for March would be the headline economic data releases. On the US front, Wholesale Inventories for February will be released on a monthly basis. 

USD/JPY Forecast: Technical Analysis

The USD/JPY continues bullish, but the average daily range (ADR) has been 55 pips during the last three days. Daily moving averages (DMAs) below the spot price further reinforce the uptrend, and it's worth noting that the 100-DMA at 109.48 is on the verge of crossing over the 200-DMA at 109.60.

 

With that considered, the first resistance level for the USD/JPY would be 124.00. If the latter is breached, the March 29 daily high of 124.30 will be revealed, followed by the year-to-date high of 125.10.


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