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MTrading Team • 2023-04-17

USDJPY bulls ignore US Dollar retreat amid cautious optimism

USDJPY bulls ignore US Dollar retreat amid cautious optimism

Global market players lick their wounds after Friday’s risk-off mood as hopes of economic recovery gain momentum. Adding strength to the mildly positive sentiment could be the traders’ reassessment of hawkish Fed concerns.

With the slightly positive risk profile and the recheck of the Fed concerns, the US Dollar pares the previous day’s corrective bounce off a one-year low.

Furthermore, talks that the US will successfully overcome the recession fears also improve the market sentiment and weighed on the US Dollar.

It’s worth noting, however, that the USDJPY pair manages to print the biggest daily gains among the F10 currency pair as the new BoJ Governor Ueda demands ultra-easy monetary policy.

Elsewhere, China-linked headlines allowed the risk barometer AUDUSD pair to remain firmer while USDCAD and USDCHF portray the US Dollar weakness.

It should be observed that Wall Street closed in the red but S&P 500 Futures printed mild gains while stocks in the Asia-Pacific region traded mixed.

Cryptocurrencies pare recent gains while Gold reverses the previous day’s losses and the crude oil grind higher amid sluggish markets.

Following are the latest moves of the key assets:

  • Brent oil struggles for clear directions, printing mild losses around $86.40 at the latest.
  • Gold price prints minor gains to pare the previous day’s losses near $2,020.
  • USD Index fails to extend the previous day’s rebound from one-year low, down near 101.56 at the latest.
  • Wall Street closed with minor losses while equities in the Asia-Pacific region traded. However, shares in Europe and the UK seem slightly positive during the initial hour.
  • BTCUSD and ETHUSD pare recent gains around $30,000 and $2,100 at the latest.
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Market consolidates amid light calendar

Although a slew of economic and geopolitical concerns play their role to lift the market’s mood after a downbeat day, the latest trading sentiment appears nothing more than consolidation ahead of the key PMIs for April. It’s worth noting, however, that multiple UK data are on the table and so do China's Q1 GDP but there isn’t anything earth-shattering and hence the traders pare recent moves amid a sluggish start to the week.

That said, hawkish central bank concerns are back on the table and hence the latest risk-on mood may fade soon amid fears of economic, as well as geopolitical, tensions. That said, the yields are grinding higher and hence the bond market sell-off can help the US Dollar to regain its upside momentum after witnessing downside since early March.

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

Nothing major on the table

While the aforementioned data/events can entertain the traders moving forward, the economic calendar appears mostly empty on Monday, apart from speeches from multiple policymakers from the BoE and the ECB. Hence, traders may witness further consolidation of the latest moves ahead of Tuesday, which in turn can favor the riskier assets.

May the trading luck be with you!