US yields are declining, with the 10-year yield down 7.3 basis points to 4.357% and the 30-year down 8.1 basis points to 4.918%. Recently, the 30-year yield traded at a higher point of 5.07%. This movement in yields contributes to the US dollar’s continued decline.
The EURUSD is experiencing upward momentum, trading above its 200-hour moving average at 1.16567. It edges closer to the swing area near 1.1691, a crucial level between April and November 2021. Buyers are challenged to maintain levels above 1.1691 to confirm a bullish trend.
Usd Jpy Movement
The USDJPY has moved below its 200-hour moving average, indicating a bearish near-term bias. After a brief retest at 147.703, the pair descended to a new session low. The 200-hour moving average acts as resistance, with further bearish movement potentially targeting 146.86 for support. The 38.2% retracement level at 146.704 serves as an additional downside marker.
We believe the move lower in US yields, as noted by Michalowski, has further to run. The most recent Personal Consumption Expenditures (PCE) inflation data came in below expectations at 2.6%, reinforcing the view that the Federal Reserve may cut rates sooner. For derivative traders, this signals that bearish dollar strategies remain attractive.
The push toward the key swing area in the Euro is supported by more than just technicals. Recent data from the Commodity Futures Trading Commission shows large speculators increased their net long positions by over 12,000 contracts last week, signaling growing conviction in the Euro’s strength. We would consider buying call options or establishing bull call spreads to capitalize on a sustained break of that pivotal level.
Japanese Yen Outlook
The downside bias in the Japanese Yen pair below its key moving average presents a clear opportunity. While the Bank of Japan has been slow to normalize policy, we recall the Ministry of Finance spent a record of nearly $62 billion on intervention in 2022 to strengthen the currency. We are therefore looking to buy put options, targeting the support levels mentioned in his analysis.
