When the dollar-yen rebounded from the low of 105.98 recorded on May 6 to the bottom, it rapidly expanded to 108.08 on May 19 (highest price in about one month). During this period, from a technical point of view, it went from neutral to rising, with the breakout of the Ichimoku Kinko Hyo Line, the reference line, the Bollinger Midband, and the cloud upper limit turn that suggests a strong buying signal.

The market is aware of the trend change of (However, the weight of the upper price at 108-yen level is also highlighted, for example, it was pushed back to 107.30 temporarily yesterday). In order to determine whether yesterday’s lowering was just a push or whether the previous day’s raising was a deception in the first place, today it seems that attention will be focused on whether it can defend the Ichimoku and the reference line in the first half of the 107-yen range.

From the fundamental’s point of view,

(1) there is an increase in the BOJ’s observation of additional mitigation (reported to hold an extraordinary meeting on May 22)

(2) the expectation for the opening of the NPC in China (open on May 22)

(3) worldwide. Easing out restrictions (the expectation that the new coronavirus has peaked out → the risk aversion mood has receded)

(4) The US main stock index and crude oil futures prices have remained solid (WTI crude oil has passed the June delivery month without disturbance) Increasing cross yen (including currencies in emerging countries) → There is an increasing number of good materials that remind us of the appreciation of the yen.

As mentioned above, the dollar-yen is technically and fundamentally “re-increasing after one round of sales”. Despite a series of US economic indicators announced today (new unemployment claims, Philadelphia Fed Manufacturing Index, Powell Fed Chairman’s statement, etc.), we anticipate that a short-term upward trend will continue as the main scenario.

We will assume that market will try 108 yen again over the weekend.

Today’s expected range: 107.15-108.00

Analyzed by: Mr. Naoto Arase, Head of Fintect of Goldwell Capital