US yields are falling. The 10-year yield has decreased by 7.3 basis points to 4.357%, while the 30-year yield is down 8.1 basis points to 4.918%. Recently, the 30-year yield peaked at 5.07%. This drop in yields is contributing to the ongoing decline of the US dollar. The EURUSD is gaining strength, trading above its 200-hour moving average at 1.16567. It is approaching the critical level of 1.1691, which was significant between April and November 2021. To confirm a bullish trend, buyers need to keep prices above 1.1691.

USDJPY Movement

The USDJPY has fallen below its 200-hour moving average, indicating a bearish trend in the short term. After a brief attempt to retest 147.703, the pair dropped to a new low. The 200-hour moving average is now acting as resistance, and further declines may target the support level of 146.86. The 38.2% retracement level at 146.704 also serves as a key downside indicator. We believe that the drop in US yields has more room to move downwards. The latest Personal Consumption Expenditures (PCE) inflation data came in lower than expected at 2.6%, suggesting that the Federal Reserve might cut rates sooner. For derivative traders, this makes bearish dollar strategies appealing. The Euro’s approach to its key swing area is supported by more than technical factors. Recent data from the Commodity Futures Trading Commission indicates that large speculators increased their net long positions by over 12,000 contracts last week, reflecting growing confidence in the Euro’s strength. We recommend buying call options or establishing bull call spreads to take advantage of a sustained break at this important level.

Japanese Yen Outlook

The downward trend in the Japanese Yen below its key moving average presents a valuable opportunity. While the Bank of Japan has been slow to change its policy, we remember that the Ministry of Finance spent nearly $62 billion on interventions in 2022 to strengthen the currency. Therefore, we are looking to buy put options, focusing on the highlighted support levels. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now