A strong NFP report and lower odds of near term rate cuts, yet the response in the Dollar was a decisive sell-off, going to show that fundamentals are rarely a perfect push point for price.
Instead, it's the USD/JPY pair that seems to be swinging an immense amount of weight in the US Dollar backdrop and a big reason for that is the still built-in carry trade, with the pair more than 50% above early-2021 values.
The initial reaction to this morning's NFP report was as one would probably expect - with strength - but USD/JPY found resistance in a familiar area of 154.45 - the same spot that set support back in December ahead of the BoJ rate hike after being resistance in October - and bears went on the attack.
The 'why' here is highly speculative as it could be longer-term hedges for carry positions unwinding although given the reaction to positive US data that narrative wouldn't seem to fit, at least for now.
The bigger test, however, is whether bulls respond to support and it's the 151.95 level sitting underneath the prior swing low that remains a big spot on the chart, where I think we'll get some level of read on whether buyers are still interested in tracking the still positive carry on the long side of the pair. - js
Instead, it's the USD/JPY pair that seems to be swinging an immense amount of weight in the US Dollar backdrop and a big reason for that is the still built-in carry trade, with the pair more than 50% above early-2021 values.
The initial reaction to this morning's NFP report was as one would probably expect - with strength - but USD/JPY found resistance in a familiar area of 154.45 - the same spot that set support back in December ahead of the BoJ rate hike after being resistance in October - and bears went on the attack.
The 'why' here is highly speculative as it could be longer-term hedges for carry positions unwinding although given the reaction to positive US data that narrative wouldn't seem to fit, at least for now.
The bigger test, however, is whether bulls respond to support and it's the 151.95 level sitting underneath the prior swing low that remains a big spot on the chart, where I think we'll get some level of read on whether buyers are still interested in tracking the still positive carry on the long side of the pair. - js
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.