Japanese Yen Might Reclaim Some Glory

U.S. Dollar Index (USDX)

The dollar index retreated this morning amid rising recessionary fears after the last Fed hike last week. Market participants believe inflation is peaking and the recession is one step away. Meanwhile, Federal Reserve Chairman mentioned that interest rates will remain higher for longer than anticipated.

On the hourly chart, the index shows a tendency for further decline below 104 as the 55 moving average intercepts with the lower band of 20 periods Bollinger bands. Technical indicators show an increase in selling pressure.

Meanwhile, the daily chart is also showing a declining pattern as RSI is closing to 30 and the MACD shows more divergence.

Pivot Point: 104.00

Japanese Yen (USDJPY)

The Japanese currency ascended this morning on news that the Japanese government might soon revise a joint statement with the Bank of Japan (BOJ) over the latter’s inflation target. Potentially, the statement could open the way for a tweak in the BOJ’s ultra-loose monetary policy.

The revision, if made, would be done after a new BOJ governor is appointed in April, a move that may heighten the chance of a tweak to incumbent governor Haruhiko Kuroda’s ultra-loose monetary policy. That policy stance and the resulting interest rate differentials with the rest of the world have caused the yen to plunge more than 15% this year.

The yen gained 0.34% at 136.24 against the greenback, after jumping more than 0.5% to a high of 135.78 earlier in the session.

The pair is forming a solid declining trend supported by the readings from RSI and MACD. Meanwhile, Fibonacci retracement shows weak support at 135.75.

Pivot Point: 135.90

Spot Gold (XAUUSD)

Gold prices slightly moved this morning as markets recapped a flurry of hawkish central bank signals and growing recession risks. Metal markets were slammed by rising interest rates this year, which drove up the opportunity cost of holding non-yielding assets- especially gold and other precious metals.

Meanwhile, investors are growing increasingly wary of high inflation and rising interest rates triggering a recession in 2023.  Spot gold was flat at around $1,793.55 an ounce, while gold futures rose 0.2% to $1,802.90 an ounce.

Spot Gold remains pressured below $1,800 per ounce as the hourly chart shows a tendency to move downward. The current support on the hourly chart is actually 1,785 but breaking below 1,793 is required to hit. Otherwise, the yellow metal will be fluctuating between 1,790 and 1,796.

Pivot Point: 1,790

West Texas Crude (USOUSD)

Oil prices started recovering from steep losses in the prior session as markets bet on a demand recovery fuelled by the Chinese economic reopening, while the Biden administration pledged to begin refilling its strategic reserve also brightened the outlook for prices.

The country has now begun relaxing several anti-COVID measures, with recent road and air transport metrics showing that fuel demand is already picking up.

But a pledge from the U.S. government that it will begin refilling its Strategic Petroleum Reserve (SPR) in February also served as a buy signal for markets.

The U.S. government drew heavily from the SPR in a bid to cap rising fuel prices this year, bringing it to its lowest level in nearly 40 years. Weak economic data from China also showed that the country has a long road to recovery, which could indicate a staggering recovery in demand.

Brent futures rose 1% to $80.04 a barrel, while West Texas Intermediate futures jumped 1.3% to $75.44 a barrel.

Pivot Point: 75.30