USD/JPY (current price: 111.40)
The Yen has been acting as the strongest G10 currency again for the last week, following two weeks of correction. The mostly favorable economic data from the U.S. wasn’t enough to lift the Dollar from 3-week lows against the currency. The pair is close to the very important 110.5 level and a move below that support could trigger another leg in the strong downtrend that started in December. Besides the U.S. Employment Report, the ISM Manufacturing PMI, and the Revised UOM Consumer Sentiment Index both came in slightly better than expected, as vehicle sales were lower than the consensus estimate. Investors still remain skeptical about further rate hikes by the Fed, following Janet Yellen’s dovish speech on Tuesday.
Our assessment: USD/JPY looks to be set for new lows, as the Fed is getting further away from more rate hikes, despite the stable economic releases from the U.S. International worries seem to keep the central bank in the dovish camp for now.
