USD / JPY PRICE PERSPECTIVE: THE US DOLLAR SNA HIGHER WITH TREASURY INCOME FOLLOWING THE SPEECH OF THE POWELL FEED CHAIR
- USD / JPY price being traded at its strongest level in nine months at the 108.00 range
- The US dollar bulls boosted the DXY index sharply with the acceleration of securities settlement
- Fed President Powell minimizes the impact of increased earnings on broader financial conditions
- Sharpen your technical analysis skills or learn about implied volatility trading strategies!
The US dollar is flying high today, with signs of strength in all currency pairs. The gains of the US dollar were most notable against the euro and the yen. USD / JPY shot more than 90 pips in the session, while EUR / USD plunged as Fed Chairman Jerome Powell triggered a wave in Treasury income. The most recent extension of the bond settlement caused the 10-year Treasury yield to exceed the 1.55% level, which further improved US interest rate differentials and stimulated US dollar bulls.
DXY – US DOLLAR INDEX PRICE TABLE: DAILY TIME TABLE (OCT 05 2020 TO 04 MAR 2021)
Graph by @RichDvorakFX created using TradingView
On the balance sheet, the broader DXY index increased by 0.75% to eclipse its 100-day simple moving average and the higher Bollinger Band. Unsurprisingly, the recent acceleration in the buying pressure of the US dollar corresponded to a rise in both the MACD indicator and the relative strength index. The next technical resistance for the DXY Index stands out around its maximum oscillation on the 4th of February. Overcoming this obstacle could bring the Fibonacci retracement levels of 61.8% and 78.6% of the low leg from November 2020 to January 2021 in focus. Rejecting the year’s high so far could motivate US dollar bears to turn to the simple 20-day moving average.
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PRICE PERSPECTIVE IN USD – IMPLIED VOLATILITY TRADING RANGE IN US DOLLAR (NIGHT)
The volatility of the exchange rate has been heating up in the wake of the recent volatility of the bond market. Interestingly, even despite today’s movement, USD / JPY goes upimplicit night volatility of 5.4% it is below its average 20-day reading of 5.7%. This suggests an implicit range of a mere 62 pips. AUD / USD and NZD / USD are expected to be among the most active major currency pairs during Friday’s trading session, judging by their respective readings of implied overnight volatility of 10.3% and 14.6%. The next release of monthly non-farm payroll data, due on March 5 at 13:30 GMT, stands out as a high-impact risk event facing the US dollar. Learn more about how to negotiate the NFP report on here.
— Written by Rich Dvorak, Analyst for DailyFX.com
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