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14.03.2022: USD flat ahead of Fed鈥檚 meeting; outlook for USD, USD/JPY, AUD/USD - YouTube
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Hi everyone!
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You are watching a recap of the Asian session.
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Market sentiment was quite positive in today鈥檚
Asian session.
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Asian stock indices were mostly up amid hopes
for a diplomatic solution to the conflict
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between Russia and Ukraine.
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The Nikkei index rose by 0.9%, while the MSCI
AC Asia Pacific Index dropped by 1.6%.
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US Treasury yields also advanced, pushing
the US dollar higher.
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As a result, the greenback reached a 5-year
high against the yen.
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One of the main events of the week will be
the Fed鈥檚 meeting.
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The US dollar kicked off the week with a modest
gain.
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However, it traded flat versus its main rivals
during the Asian session.
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Analysts believe that the US currency is likely
to remain in the narrow range for some time.
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At the same time, the likelihood of an upward
movement is quite high given its current dynamic
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and fundamental factors.
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The next resistance levels are located at
99.97 and 100.00.
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Traders are cautious ahead of the Fed鈥檚
meeting.
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They are refraining from opening extra positions.
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The regulator is widely expected to hike the
key rate.
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Inflation expectations in the US reached a
new all-time high.
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The indicator even exceeded the Fed's target.
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Thus, inflation concerns may force the Fed
to raise the key rate by 0.50% at the March
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meeting.
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Fed funds futures signal at least six or seven
increases this year to about 1.75%.
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If so, the US dollar index will be able to
consolidate near the highest level of May
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2020.
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The yen looks even weaker.
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On Friday, the greenback climbed significantly
against the yen after the US dollar index
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grew by 0.62%.
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Today, the dollar/yen pair extended gains,
consolidating above 117.20.
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This is why there is a high chance that the
price will reach a higher level.
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The next target level is located above 119.50
and higher.
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Even though the yen is a safe-haven asset,
it is unable to assert strength.
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The main reason for this was a large increase
in the US government bond yields.
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Additionally, the Bank of Japan's Yield Curve
Control Program does not allow Japan's government
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bonds to follow the increase in the other
global government bonds.
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The Bank of Japan is also in no hurry to tighten
monetary policy like other major central banks.
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For this reason, the dollar/yen pair is expected
to continue its upward movement.
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However, bear in mind that the instrument
is overbought.
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This is why some analysts doubt that the price
may reach the range of 119.50-119.90.
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The pair could also nosedive following a decline
in stock indices.
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Currently, markets are calm.
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Yet, volatility will increase considerably
on Wednesday ahead of the Fed meeting.
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The Australian dollar is also facing bearish
pressure.
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It closed last week with a drop of 65 pips
despite a slight increase in risk appetite.
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Risky assets grew following Vladimir Putin鈥檚
comments that the negotiations with Ukraine
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brought some positive results.
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At the same time, European and US stock markets
entered the green zone.
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Today, the Aussie showed a modest decline
of 0.6% during the Asian session as the US
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dollar strengthened.
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The economic calendar for Australia remains
empty.
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This is why the current trajectory of the
Aussie will largely depend on the greenback.
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The Australian dollar also looks overbought.
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Since the beginning of a rally in commodity
markets, it has soared considerably versus
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other world currencies.
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So, it is not surprising that now, it is experiencing
the steepest fall.
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Analysts believe that it will soon slide below
the nearest target level of 0.7227.
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After that, it may decline to 0.7065, a high
of June 2020.
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Tomorrow, market participants will take notice
of the release of the RBA鈥檚 meeting minutes.
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RBA Governor Philip Lowe hinted at higher
interest rates as rising commodity prices
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put pressure on the central bank.
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It needs to hike the benchmark rate to control
soaring inflation.
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Lowe also said about the possibility of a
rate increase in June.
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However, it is not certain yet.
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This is the main news of the Asian session.
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Subscribe to our channel and keep close tabs
on the market situation.
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Feel free to leave feedback!
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