The dollar-supportive divergence-meme is coming back to the fore. The stimulus bill is working its way through the reconciliation process, which has been utilized by the last four administrations. The size of the fiscal shock ($900 bln in December and probably something close to $1.5 trillion now) is head and shoulders above what most other high-income countries will do. Consider the ballyhooed European Recovery Fund. It is roughly the equivalent size of the US December package. The application process is underway, and the first funds are unlikely to be distributed much before midyear.
In the first half of last week, the dollar trended lower and neared the bottom of the support band we identified (JPY104.40-JPY104.60). However, it found better footing and ahead of the weekend approached the (61.8%) retracement target (~JPY105.25) of the losses suffered since seeing JPY105.75 before the US jobs data. The momentum indicators are trending lower. The rising US 10-year yield, which finished the week near 1.18%, may offer dollar support from Japanese accounts. Maybe the dollar will chop around the JPY104.50-JPY105.50 range in the coming days.
In the first half of last week, the dollar trended lower and neared the bottom of the support band we identified (JPY104.40-JPY104.60). However, it found better footing and ahead of the weekend approached the (61.8%) retracement target (~JPY105.25) of the losses suffered since seeing JPY105.75 before the US jobs data. The momentum indicators are trending lower. The rising US 10-year yield, which finished the week near 1.18%, may offer dollar support from Japanese accounts. Maybe the dollar will chop around the JPY104.50-JPY105.50 range in the coming days.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.