Risk Rebound Contingent on USDJPY Rally Continuing
(MENAFN- DailyFX) Talking Points:
- USDOLLAR Index above daily 34-EMA for first time since March 3. - USD/JPY trades through ¥108.00 as DAX Nikkei post rallies. - Higher volatility in FX markets should have implications for your trading strategies. With Japanese investors coming back online for the first time in a week market participants must feel a small sigh of relief that the re-opening of markets didn't mean pent-up panic rising to the forefront. Instead the week off has calmed the nerves of investors for the time being with USD/JPY now up nearly +300-pips from last week's low. It seems that the tentative rebound in risk sentiment - with the Japanese Yen coming off - is tied to the idea that the Federal Reserve won't be able to raise rates in June. Necessarily then with markets pricing out the possibility of a June rate hike then investors will turn to the next time when the Fed updates its staff economic projections: September. But why would Yellen & co. want to tip the scales a few weeks before what will be the contentious US presidential elections? It seems unlikely. Effectively markets may be turning their sights to December for the Fed's next move. With future liquidity expectations now seemingly more favorable concerns over the machinations of Japanese financial markets are allowed to take a back seat. In an environment marked by a weaker Yen and rising Crude Oil prices there's ample room for global equities to rally once more. See the above video for technical considerations in EUR/USD USD/JPY Gold Silver Crude Oil the US S&P500 and the USDOLLAR Index. Read more: Euro Lacking Direction as Data Momentum Improves Brexit Concerns Ebb If you haven't yet read the Q2'16 Euro Forecast "EUR/USD Stuck in No-Man’s Land Headed into Q2’16; Don’t Discount ’Brexit’" as well as the rest of all of DailyFX's Q2'16 quarterly forecasts. --- Written by Christopher Vecchio Currency Strategist To contact Christopher Vecchio e-mail Follow him on Twitter at CVecchioFX To be added to Christopher's e-mail distribution list please fill out this form
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