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USD/JPY registered the longest pre-registration since April 2011, rising 9 days in a row and the exchange rate could continue to strengthen in the coming days. As the Relative Strength Index (RSI) climbs back into overbought territory.
USD/JPY Rally Pushes RSI into Overbought Territory
USD/JPY broke its August 1998 high (147.67) due to US Treasury yields. Climb to the highest level of the year in October. And the exchange rate may continue to create prolonged highs and lows in the coming days as the RSI remains above 70 .
As a result, USD/JPY may seek to test August 1990 (151.65) as improvements in the US Consumer Price Index (CPI) suggest continued price growth and the Federal Reserve may hold on to its approach current in the fight against inflation because the central bank warned that “Too little running costs to reduce inflation is likely to outweigh too much running costs.”
On the other hand, USD/JPY may continue to trace a positive slope at the 50-day SMA (141.66) as evidence of tight inflation puts pressure on the Federal Open Market Committee (FOMC) to pursue tighter policy high and central bank A further 75bp increase may be sent in the next interest rate ruling on 2 November as the summary of economic outlook (SEP) reflects an upward path for the US rate.
Until then, separate paths between the Fed and the Bank of Japan (BoJ) could keep USD/JPY going like a ruler. Haruhiko Kuroda And Co is still reluctant to change gears. While retail sentiment is likely to continue Because traders have been selling pairs for most of the year.
The IG Client Sentiment (IGCS) report shows that only 18.55% of traders are currently net buy USD/JPY, with a short to long trader ratio of 4.39 to 1.
The number of net traders was up 15.15% since yesterday and down 7.64% since last week. Meanwhile, net traders’ net purchase volume was 4.99% higher than yesterday and up 10.71% from last week. The net long decline came as USD/JPY climbed to an all-year high (149.09), while rising short-term interest rates prompted stalling behavior as 22.67% of net long traders of USD/JPY are not in stock. The last two weeks
That said, USD/JPY may continue to strengthen over the next few days. as it extended a series of higher highs and lower lows from last week. And the exchange rate may try to test August 1990 (151.65) as the RSI climbs back into territorial overbought.
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Daily USD/JPY Rate Chart
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- USD/JPY is still trading at its highest for the year after reaching its August 1998 high (147.67), with a nine-day rally in exchange rates pushing the Relative Strength Index (RSI) above 70.
- USD/JPY could continue to make a series of higher highs and lows as long as the RSI remains in the overbought zone. It had a hold/close above the 150.00 level (38.2%), which put August 1990 (151.65) on the radar.
- The next point of interest is the approximate July 1990 high (152.25), but failure to clear the 150.00 handle (38.2 percent correction) along with a move below 70 in the RSI could lead to a pullback. In the short term, USD/JPY, after moving below its August 1998 high (147.67), put the 144.10 area (100% expansion) back on the radar.
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— Written by David Song, currency strategist.
Follow me on Twitter at @DavidJSong.
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