PPI Exceeds Expectation, USD/JPY Hits Resistance

Forex

Summary:

Non-farm payrolls and CPI are high-than-expected, U.S. PPI climbed 0.7% month-on-month in January, the highest since June.

BUY USDJPY

Close Time

CLOSED

134.315

Entry Price

137.500

133.600

150.333 +0.724 +0.48%

178.5

Pips

Profit

133.600

136.100

Exit Price

134.315

Entry Price

137.500

Fundamentals

U.S. PPI increased 0.7% month-on-month in January, compared with 0.40% expected and -0.50% previous.

U.S. annual PPI declined to 6% in January versus the previous 6.20%, stronger than 5.40% expected.

U.S. inflation is still under pressure, according to the high-than-expected recovery data.

Initial jobless claims fell by 1000 to 194,000 from 195,000 the previous week, compared to the forecast of 200,000.

Technical Analysis

The dollar rallied strongly after the release of the PPI and was in an upward trend in today's Asian session, indicating that this trend is supported.

The expectations of the Fed to raise interest rate will increase as PPI data is strong. Thus, non-US currencies, including the yen, will be under pressure.

PPI Exceeds Expectation, USD/JPY Hits Resistance_2

USD/JPY gained to 134.666 during today’s Asian session. This currency pair will continue to rise before the dollar rallies.

There is profit-taking pressure at this position within the 4-hour chart.

However, with the expectation of a stronger dollar, the price will break through this resistance and continue to rise. 137.740 would be the potential price.

Trading Recommendations

Trading Direction: Long

Entry Price: 134.315

Target Price:137.500

Stop Loss: 133.600

Support: 133.815

Resistance: 138

Risk Warnings and Disclaimers

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Warren Takunda

Forex

Summary:

The US dollar is gaining strength against major currencies due to better-than-expected US data, causing investors to revise their peak rate forecast to above 5%. The ECB raised rates by 50 basis points in February and plans to do the same in March, with rates remaining high until inflation falls toward the target. EUR/USD is currently testing support at 1.067 and the market structure is bearish, with a likelihood of continued bearish movement after a pullback to the demand-turned-supply.

SELL EURUSD

Close Time

CLOSED

1.06500

Entry Price

1.04500

1.07500

1.05311 -0.00429 -0.41%

37.4

Pips

Profit

1.04500

1.06126

Exit Price

1.06500

Entry Price

1.07500

EURUSD : The US Dollar Gains Strength as the Euro is Put under Pressure_1

The euro has been on a downward trend for the third consecutive day, with the EUR/USD trading at 1.0639, down 0.30% during the European session. The US dollar is gaining strength against major currencies this week as US data surpasses expectations. Retail sales increased by 3%, and PPI and unemployment claims were better than expected. The markets had anticipated lower figures, but the resilience of the US economy in the face of rising interest rates has surprised investors. The Fed has been indicating a "higher for longer" approach for some time, but the markets have held onto their dovish stance, expecting the Fed to pivot and even cut rates later in the year. However, the host of robust US numbers has forced investors to recalibrate, resulting in the markets revising their peak rate forecast to above 5%.

The US dollar has emerged as the big winner of the shift in market thinking, with US Treasury yields reaching their highest level this year. During the last Fed meeting, Mester believes rates should have been raised 50 basis points, indicating the Fed might switch away from moderate 25-bp hikes if inflation doesn't drop quickly enough. Mester has also stated that she doesn't see inflation falling to 2% until 2025, pointing to a long disinflation process.

On the other hand, the European Central Bank (ECB) raised rates by 50 basis points in February and plans to do the same on March 16, with the main financing rate currently at 3%. This rate is significantly lower than the Fed's rate (4.5%) and other major central banks. Although it is unclear what the Bank has planned after the first quarter, with inflation running at 8.5%, the risk for further rate hikes is skewed to the upside. The ECB has made it clear that rates will remain high until there is evidence that inflation is falling toward the target, which means that the current rate-tightening cycle is far from over.

The EUR/USD is currently testing support at 1.063, and below that is another suppor supported at 1.050. The overall market structure is bearish, and there is a likelihood of continued bearish movement after a pullback to the demand-turned-supply. This suggests that the euro's downward trend may continue for some time. Investors should remain cautious and keep a close eye on the evolving market trends to make informed investment decisions.

TRADE RECOMMENDATION

SELL EURUSD

ENTRY PRICE : 1.0650

STOPLOSS : 1.0750

TAKE PROFIT : 1.045

EXP : 31 MARCH

Risk Warnings and Disclaimers

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King Ten

Forex

Summary:

USD will keep ascending shortly under a mature bullish technical analysis, but with strong resistance at 6.93.

SELL USDCNH

EXP

EXPIRED

6.92000

Entry Price

6.83000

6.97000

7.27653 +0.03027 +0.42%

Pips

EXPIRED

6.83000

6.91316

Exit Price

6.92000

Entry Price

6.97000