The dollar-yen pair has been sluggish after rising. Psychological milestone 110.00 becomes resistance.

Dollar-yen rises to 109.89 over US time due to rising observations of early tapering and strong stock markets.

After that, it fell back to 109.58 due to the decline in long-term interest rates in the US, and the impact of the US Federal Reserve’s economic report was limited.

After falling to 1.2164 due to high eurodollar pressure and poor retail sales in Germany, 1.22 units rebounded against the rise in Eurozone PPI.

The dollar-yen pair continues to buy technical dollars even if it does not break through the psychological milestone of 110.00.

Today’s ADP employment statistics, ISM non-manufacturing index must be watched.

Overseas time review

The dollar-yen exchange rate on Wednesday 2nd will be sluggish after rising.

(1) High dollar pressure against the backdrop of rising US early tapering observations (start of discussions on asset purchase reduction).

(2) Yen selling pressure on risk appetite against the backdrop of a strong stock market helped to raise the daily high to 109.89 in the morning of US time. However, when the psychological milestone of 110.00 is stagnant (when the return selling pressure increases).

(3) Dollar selling pressure due to the decline in US long-term interest rates (US 10-year bond yield temporarily fell below the 1.60% level to 1.58%).

(4) Short-term traders who disliked the weight of the top price sold off.

(5) Position adjustment ahead of the US employment statistics on the weekend has become a weight, and at the time of writing this article, it has been a dull move to around 109.650. The US Federal Reserve Economic Report (Beige Book) mentioned the gradual expansion of the US economy and rising price pressure, but the market reaction was limited.

Today’s outlook

The dollar-yen pair temporarily rose to 109.89 but did not break through the psychological milestone of 110.00. However, while the Ichimoku Kinko Hyo, which suggests a strong buy signal, continues to improve (a state in which the breakout above the reference line of the turning line, the breakout above the upper limit of the candlestick cloud, and the breakout of the candlestick 26 days before the lagging line are all aligned), From a technical point of view, the uptrend can be judged to be ongoing (the high 110.21 recorded on 5/28 is within range).

The fundamental point of view, today’s focus will be on the US May ADP Employment Statistics, which will be the prelude to the US Employment Statistics on the weekend, and the US May ISM Non-Manufacturing Business Conditions Index (especially employment items). If these numbers outperform market expectations, expectations for US employment statistics on the weekend will rise, and a move to further incorporate US tapering toward the June FOMC (US long-term interest rate rise → dollar appreciation) is expected. As such, we will continue to be aware of upside risks today (Philadelphia Fed Governor Harker said yesterday that the Fed may at least consider time to consider reducing quantitative easing).

Today’s forecast range: 109.20-110.00.

Analyzed by:Mr. Naoto Arase, Independent Analyst