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MTrading Team • 2023-01-23

USDJPY extends recovery from multi-day low amid sluggish markets

USDJPY extends recovery from multi-day low amid sluggish markets

Global markets begin the week on a softer footing as China’s Lunar New Year holidays join the pre-Fed silence period for the policymakers. Adding strength to the inaction could be a lack of major data and events on the economic calendar.

As a result, the US Dollar extends its previous losses and allows major currency pairs, as well as Antipodeans, to remain firmer. It’s worth noting, however, that the prices of Gold and Crude Oil eased amid economic slowdown fears and the consolidation ahead of this week’s key events.

That said, USDJPY appears an exception as the Bank of Japan’s (BoJ) latest monetary policy meeting minutes defend easy money policies. EURUSD occupies the other end while cheering hawkish ECB talks.

Leading cryptocurrency pairs seesaw around the multi-day high marked in the last week as traders reassess the upbeat signals from the industry.

Following are the latest moves of the key assets:

  • Brent oil grinds above $87.00 after rising in the last two consecutive weeks.
  • Gold prints mild losses near $1,930 hurdle following a four-week uptrend.
  • USD Index stays depressed near 101.70, dropping for the fourth day in a row.
  • Wall Street closed in the green but stocks in the Asia-Pacific region, as well as equities in Europe and the UK, trade mixed at the latest.
  • BTCUSD and ETHUSD struggle around the multi-day high, close to $22,700 and $1,650 as we write.
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China, Fed restrict market moves

Be it a one-week-long New Year holiday in China or the restrictions on Fed policymakers to restrain from public speeches two weeks before the monetary policy, markets witnessed a sluggish start to the key week comprising the US GDP and multiple PMIs. Adding strength to the week’s importance is the inflation numbers from Australia and New Zealand.

It should be noted that the mixed concerns surrounding the global economic recovery, or at least the ease of recession fears, joined the lackluster sentiment to allow the US Dollar bears to keep the reins. Additionally, the increasing odds of the Fed’s easy rate hikes and policy pivots also exert downside pressure on the greenback.

While the US Dollar's weakness contrasts with the hawkish comments from the ECB policymakers to underpin the EURUSD upside, the USDJPY manages to buck the trend as the BoJ keeps suggesting a long future for the easy money amid downbeat bond yields.

Additionally, prices of Gold and Crude Oil pare recent gains as off in Beijing allows traders to consolidate previous gains backed by China reopening.

Talking about cryptos, the optimism surrounding the BTC buyers’ return and a sigh of relief from the FTX fiasco struggle to defend the BTCUSD and ETHUSD bulls amid doubts over the recent rally, especially amid looming regulatory fears.

  • Strong buy: GBPUSD
  • Strong sell: ETHUSD, USDJPY
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Nothing major on Monday

Eurozone Consumer Confidence and Chicago Fed activity gauge, as well as Canada’s housing data, will decorate today’s calendar and may offer intermediate directions. However, the first readings of January’s PMI and Q4 data for the US GDP, as well as inflation data for Australia and New Zealand, gain major attention and hence the scheduled data for Monday may not offer notable moves except being too extreme.

May the trading luck be with you!