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MTrading Team • 2023-05-22

USDJPY struggles amid softer start to the key week

USDJPY struggles amid softer start to the key week

Traders portray the typical cautious mood ahead of crucial data/events scheduled for publication during the week. During the weekend, the US debt ceiling talks fell apart and allowed the US Dollar to extend Friday’s downbeat performance. However, comments from US President Joe Biden put a floor under the greenback, as well as the US Treasury bond yields.

With this, EURUSD and USDJPY struggle for clear directions while USDCAD ignores downbeat Oil prices to remain mildly offered. Further, Gold fades the previous day’s recovery whereas AUDUSD loses the most among the G10 currency pairs, mainly due to China-linked headlines.

Elsewhere, NZDUSD also remains pressured as traders appear divided about the RBNZ’s plans for the rate hikes. Furthermore, equities in the Asia-Pacific zone edge higher but US stock futures print minor losses at the latest.

Talking about cryptos, BTCUSD also rebound from 100-DMA and ETHUSD posted minor gains after unimpressive weekly performances.

Following are the latest moves of the key assets:

  • Brent oil drops for the third day in a row, down 0.70% intraday near $75.30 at the latest.
  • Gold price fades the previous day’s rebound from multi-day low near $1,975 as we write, mildly offered of late.
  • USD Index pares intraday losses around 103.15 after reversing from a two-month high.
  • Wall Street closed with minor losses but the Asia-Pacific shares to grind higher. However, equities in Europe and the UK print remain mildly offered as we write.
  • BTCUSD and ETHUSD ink minor gains around $26,900 and $1,810 as we write.
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Cautious optimism it is.

Although traders appear mostly inactive early Monday, the hopes of the US avoiding default and economic transition allow them to remain cautiously optimistic. Even so, fears that the US-China tension will escalate and that China’s recovery is elusive weigh on the AUDUSD price, especially after the RBA’s dovish hike.

Elsewhere, US debt ceiling talks appear jittery even as Preside Biden hopes for a positive solution ahead of the scheduled expiry of early June. The same joins the recently mixed Fed talks to challenge the US Dollar bulls even as upbeat US data joins interest rate futures to limit the greenback’s downside.

On a different page, mixed feelings about China and the US checks the Gold sellers after a two-week downtrend while also exerting downside pressure on the Oil price. It should be noted, however, that the Yen gradually improves due to its traditional haven status, even if yields restrict the USDJPY downside.

BTCUSD and ETHUSD stay defensive amid looming US default and likely stiff regulations.

  • Strong buy: Gold
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD

A likely sluggish day ahead…

Given the absence of major data/events on the calendar, as well as a bank holiday in Canada, global markets may witness a sluggish Monday. However, the fears of US default and Fed talks may entertain traders as US President Biden and House Speaker Kevin McCarthy are up for another round of talks to extend the debt limit.

May the trading luck be with you!