USDJPY tumbles as banking crisis spook positive expectations.
“This week’s policy meeting by Federal Reserve will be the determination of US dollar’s mid-term direction.”
Greenback languished as recent banking crisis reshuffled investors expectation towards the possibility of further tightening from the Federal Reserve. Following prior bail out of commercial banks, Fed introduced emergency lending programs that may further expand their $8.6 trillion balance sheet. Analysts believe that this may curtail Fed from tightening their policy aggressively as fine tuning will be required to avoid any financial distress. As such, Fed may take another approach, by increasing interest rate at a slower pace but at the same time, only react with drastic approach if inflation continues to go out of line. For the time being, investors will pay attention to the upcoming meeting in between Fed members to gain more market signals.
USDJPY, Daily: The pair extended its losses as it retraces from 200-MA line and closing below the support level of 134.90. With MACD showing persistent downside momentum, we expect the pair to tumble further down in the near future.
Resistance level: 134.90, 142.35
Support level: 127.10, 121.45
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