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What’s next? – USDJPY 21.02.18

Feb 21 2018, 04:03 PM (+06) | Fortfs.com

The dollar was trading 0.19 percent higher vs the Japanese yen at 107.53 as of 09:50 GMT on Wednesday, as the American currency extended gains across the board.


The US dollar index, which measures the greenback against six major currencies, was trading 0.17 percent higher at 89.79 by the time of this writing.


Investors seem to be betting long on the dollar ahead of FOMC minutes, pushing the greenback higher against its rivals, allowing it to recover from multi-year lows.


The Federal Open Market Committee will unveil minutes from its latest monetary policy meeting on Wednesday as of 19:00 GMT. In the document, a hawkish rhetoric on further rate hikes is widely expected following numerous evidences of strong market labor conditions and inflation.


While the FOMC estimated three rate hikes for 2018, some policymakers and analysts have recently mentioned a potential fourth increase depending on inflationary developments.


In other news, the upcoming release of over $250 billion of US debt set for later this week has been weighing on Treasury bonds, boosting yields and sending bullion prices to the downside.


On the data front, market players will keep an eye on manufacturing and services PMI indexes for February as of 14:45 GMT. Existing home sales for January are due at 15:00 GMT.


No relevant data was released in Asian hours. The pair continues to be dominated almost exclusively by the dollar’s dynamic, which depends mostly on data and political news right now.


The pair is currently testing 107.50 and a consolidation above this level would increase chances for an upward extension to 109.00 and 110.00 in the short run.


However, the bullish scenario might quickly change if Fed minutes turn out to be not as hawkish as expected. In that case, a retreat back to 106.00 or 105.00 is likely.

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