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Market Outlook
Dollar trapped in a range as market reassess China. - Zeal Capital Market

Dollar trapped in a range as market reassess China.

23-05-2022 03:43

“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

Dollar trapped in a range as market reassess China. - Zeal Capital Market

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

Dollar trapped in a range as market reassess China. - Zeal Capital Market

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

Dollar trapped in a range as market reassess China. - Zeal Capital Market

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.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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