USDJPY:

Liberally, there was no dramatic change in USD/JPY standings. Prices are limited to a descending-curve channel built from the top in 2007 bouncing higher after a test of support in the 84.21-87.09 areas, the major bottom way back to 1995. Indications of a bullish rally continue as RSI indicates positive deviation, but whether this is going to loosen the existing downward-trend is still vague. It’s wise to stay neutral for the moment, seeking for an additional indication in the imminent days and weeks.

AUDUSD:

The weak AUD/USD reverse looks ready to pick up the pace, with prices taking out support at a slight dropping channel set from November’s swing high. The pair momentarily went back over to re-test the channel’s lower border but a Bearish Engulfing pattern has at the moment surfaced indicating that downward momentum is set to go on.

The US Dollar went up dramatically higher as Asian markets responded to a positive interest rate statement from the US Federal Reserve, starting out a sign of stop orders that shifted EURUSD under the 1.44 mark for the first time since the end of August. Most considerably, Ben Bernanke and company commented “worsening in the labor market is decreasing,” which traders took as confirmation of the increase to priced-in Fed rate hike anticipation throughout latest weeks. The US central bank is extensively anticipated to look at the unemployment rate as the key determine for timing a turnaround of its very-loose financial stance. A Credit Suisse measure of the priced-in yield estimate presently indicates the markets are betting on 89 basis points in rate hikes throughout the imminent year.

Apparently, the US dollar has created remarkable bounces at the end of each of the last 4 weeks. Amongst all, the last two are the most important. Both have come following the exceptionally strong fiscal data, the result of strong NFPs and a decrease in the unemployment rate turned out to be the drive on 5th; whilst the rally on the 12th would come through the advantages of an escalation consumer on sentiment and expenditure. It’s natural to think that this is clear-cut response to data but this would contradict the usual rate that the market has marked for the US dollar for the last 9 months where important economic data has supported risk appetite and directly pressured on the dollar as a safe haven currency. The dollar’s part as in the risk appetite background might be altering. There is a chance that the currency might be producing an important bullish trend as the dollar seeking for power via different market conditions.

The spread amongst U.S. and Japanese interest rate anticipations remain to be on the side of US dollar at +68, as markets forecast no chance of tightening from the Asian side. Though, yield anticipation has usually had small significance in price decision. Even though, one can conjecture that an increase in U.S. interest rate anticipation would affect the exchange rate as the US dollar would weaken its position as the favored funding currency, going back to the throne to the yen. Following flows can substantiate a bullish USD/JPY circumstances.

Japanese officials lately allowed a 10 trillion yen deflation-fighting stimulus program intended to stabilize interest rates which could be an important part for the currency in the long run. In the meantime, risk trends keep on holding the position of a key driver for the pair and a bout of risk aversion could supply support as it would produce safe haven flows back into the Asian currency.