After hitting a 20-year trough of 129.408 on April 20th against the US Dollar, Japan’s Yen attempted a slight recovery at the start of the new week, with USD/JPY slipping below the 128.00 mark.
Still, the greenback remained underpinned by aggressive US interest rate hike expectations that kept Treasury yields high and by concerns over the economic impact of COVID-19 lockdowns in China.
Shanghai has been under stringent lockdown to curb virus spread for nearly a month, while Beijing overnight accelerated plans for mass-testing of 20 million people.
US Treasury yields remained elevated as markets have priced in 0.50% rate hikes by the Federal Reserve at each of its upcoming two policy meetings.
The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.13% to 101.868 on Tuesday. Earlier in the trading session the DXY registered a fresh two-year high of 101.963.
“Further (dollar index) upside remains a good bet. China growth risks are rising as authorities pursue an aggressive COVID campaign, conditions around Ukraine remain volatile and ‘Fed-speak’ remains as hawkish as ever,” analysts at Westpac wrote in an investor note, cited by Reuters.
Meanwhile, the Bank of Japan is largely expected to acknowledge rising inflationary pressures at its policy meeting on April 27th-28th without taking action on interest rates.
As of 8:35 GMT on Tuesday USD/JPY was edging down 0.19% to trade at 127.89. Last week the major Forex pair climbed as high as 129.408, which has been its strongest level since April 25th 2002 (129.660).
USD/JPY has appreciated 5.14% so far in April, following another 5.82% gain in March.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 128.17
R1 – 128.83
R2 – 129.52
R3 – 130.17
R4 – 130.83
S1 – 127.48
S2 – 126.83
S3 – 126.13
S4 – 125.44