Dollar trapped in a range as market reassess China.
“China reported 802 cases for Sunday, down from 824 on Saturday.”
Investors seemed unsettled as of recent due to mixed signals, thwarting off any signs for an apparent trend to emerge. According to Reuters, net long position on the greenback slipped, pressured by the change in sentiment towards riskier asset. However, soaring inflation in the US offered the currency some support, even though Fed’s hawkish tilt is most likely being priced in. On the other hand, coronavirus situation in China head for the worst, coinciding with Shanghai’s exit from lockdown. The latest Omicron variant have reached its capital – Beijing, renewing concerns for a possible lockdown as authorities push forward with “zero Covid” approach. China’s zero-tolerance strategy may leave the country’s economic momentum in peril, sparking possible breakdown in supply chain as the world’s largest manufacturing hub.
Quick recap on USDJPY
The pair got caught in a range, hovering in between 127.10 and 130.92.
USDJPY Weekly Technical Analysis
From weekly chart, the pair illustrate ample amount of room for further retracement. Recent retracement may be a prologue to an extensive downside ahead in the mid-term.
USDJPY Daily Technical Analysis
In terms of daily chart, the pair is currently testing around 127.10, coupled with increasing bearish momentum as illustrated by the MACD.
Trading Idea
ORDER: SELL STOP
ENTRY: 126.80
STOP LOSS: 129.30
Target 1: 123.90
Target 2: 122.00
ZFX Analyst’s Comment
The pair have struggled within the range due to the lack of bearish momentum pushing past 127.10. Nonetheless, a break below the support level will provide vast opportunity as the next strong is located at 121.62.
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