On 19th Sept we published our analysis on King Dollar - expecting the pair to react on a positive note in accordance to the monetary policies announced in terms of tapering this Wednesday by the Fed Chairman Jerome Powell. Dollar started on a bearish footprint this week by diving towards our major support zone at 109.20 before breaking out of our upper trend line at 109.70. The pair built on this week's solid rebound from the 109.10 horizontal support and gained some follow-through traction for the third consecutive session on Friday. The momentum was exclusively sponsored by the emergence of fresh buying around the US dollar, though reviving safe-haven demand capped the upside for the USD/JPY pair.

The USD drew some support from surging US Treasury bond yields, bolstered by prospects for an earlier Fed rate hike move. The so-called dot plot revealed a growing inclination among the Fed policymakers to raise interest rates in 2022 and pushed the yield on the benchmark 10-year US government bond back above 1.40% for the first time since July.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Market participants now look forward to Fed Chair Jerome Powell's scheduled speech for some impetus later during the early North American session. This, along with the US bond yields, will influence the USD. Traders might further take cues from the broader market risk sentiment for some short-term opportunities around the USD/JPY pair. On the technical side, King Dollar needs to break above 110.80 with a hawkish closing which would open the doors for further gains by rallying towards 111.70. On the bearish side, the Dollar needs to break below 108.74 to hand over control to bears and let Japanese Yen score some points of strength at 108.30. 

USDJPY

Sep 24 2021