The dollar-yen pair surged to the 106-yen level. Nervous trading while staring at US long-term interest rates

○ The dollar-yen pair surged to a high of 106.11 in the morning of US time due to the sharp rise in long-term interest rates.

○ After that, Fed Chairman Powell’s remarks suggesting a prolonged monetary easing were weighted, and the development was loosened to around 105.87.

○ After falling to the low Eurodollar rate of 1.2110, it will recover to around 1.2168 with the support of the decline in long-term interest rates.

○ A strong formation that broke through the dollar-yen Ichimoku Kinko Hyo turning line and the 200-day moving average

○ Fundamentals are also increasing materials to be aware of the rise in the dollar-yen rate, such as expectations for the convergence of the new coronavirus.

○ However, if the rise in US long-term interest rates begins to push down US stocks, it may spread to risk-averse yen buying.

Overseas time review

The dollar-yen pair surged in the foreign exchange market on Wednesday, 24th.

(1) US long-term interest rates soared (US 10-year bond yields soared to 1.43%, the highest level in about a year. US 30-year bond yields also soared to 2.29%, the highest level in about a year and a month), and (2) Wide-ranging dollar buying pressure against the background of (1) above,

(3) Yen selling pressure on risk appetite against the backdrop of rising Western stocks,

(4) Number of new home sales in January in the US (results 923,000, forecast 855,000, previous 842,000) The good results of the case helped to boost the price to a high of 106.11 in the morning of US time. However, when it stagnated against the back of the latest high of 106.22 recorded on 2/17,

(5) FRB Chairman Powell (the second day of parliamentary testimony at the House Financial Services Committee) suggested that monetary easing would be prolonged (to achieve the inflation target). (It may take more than 3 years) and

(6) the sharp drop in US long-term interest rates (US 10-year bond yield is 1.43% → 1.38%) against the background of (5) above, weighed down at the time of writing this article (6 o’clock Cambodia time). At present), it has been expanded to around 105.900.

Today’s outlook

The dollar-yen pair temporarily recovered to the 106-yen level, approaching the latest high of 106.22 recorded on 2/17.

(1) Breaking through the Ichimoku Kinko Hyo turning line,

(2) Breaking through the 200-day moving average,

(3) Continuing the improvement of the “SAN YAKU” in the Ichimoku Kinko Hyo,

(4) Continuing the upward trend of Dow theory,

(5) Connecting the 1/6 low and 1/21 low. However, based on the establishment of the support line (green line in the attached chart), it can be judged that the formation is strong from a technical point of view (assuming the development of exploring the room for an upside with the 200th line in the background).

From a fundamental point of view, the dollar passed the parliamentary testimony by Fed Chairman Powell without surprise (denial of early tapering observation → long-term monetary easing policy → avoidance of stock market crash) and expectations for the convergence of the new coronavirus. There is an increasing amount of material that makes us aware of the rise in the yen market.

Based on the above, we expect the dollar to continue to strengthen and the yen to weaken as the main scenario (as long as the US long-term interest rate rise and stock prices coexist, the dollar appreciation trend will continue. If the rise in US long-term interest rates begins to push down US stocks and commodity prices, it is necessary to pay attention to the ripple route to yen buying to avoid risks).

Today’s forecast range: 105.50-106.30

Analyzed by：Mr. Naoto Arase，Independent Analyst