July 11, 2022 7:16:28
The U.S dollar continues to reign its supremacy against all majors, specifically Yen on Monday while extending the previous week’s gains. Investors assessed the impact of the Bank of Japan (BoJ) policy passivity and the unfortunate assassination of former Prime Minister Shinzo Abe.
Japan’s ruling conservative coalition boosted its majority in the upper house election on Sunday. Mr. Abe was widely considered a key figure in the ruling party and held a prominent position in reviving the Japanese economy. The Bank of Japan (BoJ) remained the only major central bank among developed economies to hold an ultra-easy monetary policy.
The divergent monetary policy between US-Japan and global recession fears continued to favor the rampant rise of the USD. The U.S dollar index (DXY) touched the high of 137.28 as the fresh trading week begins, its highest since 2002.
Furthermore, the risk-averse mood amid the global growth outlook and high inflationary fears push capital flows to safe-havens. The dollar could enjoy the limelight until the risks around European energy concerns, elevated worldwide inflation pressures, and China’s growth outlook stabilized.
USD/JPY soars above 137.00
USD/JPY once again overstepped the 137.00 territories last seen in June as the pair remains optimistic on all time-frames. After a short-term consolidation in the previous week in the tight range of 134.90-136.00, the spot opened the new trading week with strong gains.
On the hourly chart, the price is well placed above the 20-day EMA (Exponential Moving Average). However, the pair retrace on a minor corrective pullback and is on the way to testing the mentioned average at 136.60.
A break below the 20-day EMA could convince bears to further testify to the 61.8% (Fib level).
Alternatively, a daily acceptance above 137.20 would result in the continuation of the upside momentum in USD/JPY.
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