'Buy the Dip' Mindset Continues for the DXY Index and the USD/JPY, according to the US Dollar Forecast
Before the release of the September US jobs report on Friday, the US Dollar (through the DXY Index) is on shaky ground due to mixed US economic data from recent days, including an unexpected decline in August US JOLTs and an unexpected beat in the September US ISM services PMI.
Insofar as anything that indicates a robust US economy provides the Fed with the justification it needs to keep raising rates, which in turn results in higher US Treasury yields, "good news is good news" for the US dollar. No pair may be more appropriate for a continuation attempt than USD/JPY rates, even though EUR/USD and GBP/USD rates have risen since the beginning of October.
Technical Analysis Of The DXY Market Prices........
The great US Dollar has been rising higher than any other asset in recent weeks. After emerging from an ascending triangle in September, the DXY Index ended the third quarter at a new annual and multi-decade high. Even while the bullish breakthrough is still legitimate, momentum has slowed recently. The daily 21-EMA (one-month moving average) is back above the DXY Index, but it is still below the rest of the daily EMA envelope. Despite contracting, the daily MACD is still above its signal line. Since mid-August, the Daily Slow Stochastics have not crossed below their median line.
The Federal Reserve continues to have the title of currently being the most aggressive major central bank because other central banks have already started backing off from rate increases. A drop below 109.14 would give a technical cause to believe a top has formed otherwise; "buy the dip" is the strategy for the dollar until the Fed pivots.
Technical Analysis Of The Usd/Jpy Value......
In spite of the DXY Index's decline and the Japanese Ministry of Finance's intervention to defend the Japanese Yen, the USD/JPY rates have stubbornly held onto their daily peak. It will be challenging for USD/JPY rates to decline significantly as long as the monetary divide between the Bank of Japan and Fed persists.
Without a corresponding pullback in price movement, impulse has weakened. The daily EMA envelope for the USD/JPY rate is above it and is still in a bullish sequential order. Despite decreasing, the daily MACD is still above its signal line. The Daily Slow Stochastics are still below the overbought area. In light of this, it's possible that USD/JPY rates are forming a bull flag following the rally in August and early September.
ln Conclusion......
The fact that vendors are cumulative implies that USD/JPY prices may continue to rise. We generally take a skeptic stance to the shared belief. Positioning is more marginal than last week but less stream than yesterday. We have a further mixed USD/JPY exchange partly due to the conjunction of previous moves and present emotions.
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