Author: Mr. Amar – Technical Analysts
The second week of 2022 was shocking when US Dollar continue to show a dovish movement and worries for the rise in inflation. Although the price is now bounced higher than 114.000, analysts predicted that sellers will gain control back around 114.600 where the previous key level has been broken through last week. This retracement is considered as a small hawkish movement in order to collect higher price orders from the sellers.
It can be seen that USD/JPY has moved sharply lower over the last few days after stalling against back on Tuesday. That hold against topside resistance started the run to the downside which has now seen the price move more than 200 pips to the downside. USD/JPY was one of the biggest losers as Covid fears increased, driven by the highly contagious Omicron variant. That pushed haven flows into the Japanese currency, but the strength likely won’t last.
However, there is a chance that inflation does rise above the BoJ’s 2% target is slim at best. Core inflation is a measure that strips out volatile items is running under 1%. The resurgence in Covid cases across Asia and elsewhere may put some upward pressure on prices, although likely not enough. Other than that, Fuji news raised concerns over tighter coronavirus measures are being considered for Tokyo which would affect the strength of Japan’s economy.