Following Friday’s inflation report, we could see the US dollar strengthening against all of its major coutnerparts. Calming down on Monday during Memorial Day, Tuesday saw another hike, as bulls have been exhausted by longer two-month bearish correction.
Inflation data from the Bureau of Labor Statistics, showing mostly the core Consumer Price Index (CPI) on an annual basis reaching 1.8%, while the market has been already sceptic due to previous disappointing data, boosted the dollar’s performance and lifted it against most of its peers.
From the fundamental point of view, dollar is getting back to its long-term bullish trend on monetary policy tightening, while yen is still led by Bank of Japan’s monetary base expansion with no strong bullish rally expected while keeping such loose policy.
The Federal Reserve tightening bets are now oscillating between September and December, while traders expect even early 2016 to be the proper time for the central monetary authority to tighten for the first time.
From the technical point of view, we have already broke above important resistance levels and reached the highest level for the dollar since 2007. We can see a stronger resistance level now at ¥123.116, as the pair has already climbed above ¥122.50 level.
As for bears, support could be seen at ¥121.445 or later at ¥120.767.
For any questions of recommendation, feel free to write us on hello@goforex.eu
