The relative growth of the dollar and the yen, the doubts of traders in the marketsDeltafx Admin 31 January 2023
Despite the improvement in the yen and the dollar in the markets after the positive data from China, traders are cautious;
Both the yen and the dollar are in recovery mode in Asian trading as investors remain cautious ahead of the Bank of England, Federal Reserve and European Central Bank meetings later this week. Asian markets slipped after better-than-expected Chinese purchasing managers’ indexes indicated a return to growth in the country’s manufacturing and non-manufacturing sectors. The Australian dollar was weighed down by the release of retail sales that came in below expectations. Currently, commodity-oriented currencies are the worst performers, while major European currencies were mixed.
Technically, while the dollar is trying to recover, the focus will be on some resistance levels to indicate a short-term drop and more durable return. These levels include minor support at 1.0765 for EUR/USD, support at 1.2252 for GBP/USD, and resistance at 131.56 for USD/JPY. These levels need to be broken one after the other to confirm a fundamental buy move for the dollar.