US Dollar’s Unwavering Strength (EUR/USD), EUR/GBP, USD/JPY Falls To Lowest Level Seen Since 1998

The Japanese Yen Has The Worst Performer Among The G-10 Currencies

Summary

  • USD/JPY hitting lowest levels in 24 years.
  • USD still strong.
  • Expectations of the next interest rate hike from BoE fell.

EUR/USD currency pair

The market is reflecting bearish signals for this currency pair. Since the US Dollar continues to rise and shows little sign of slowing, it has been a wrecking ball for the foreign exchange markets. I would exercise caution in pursuing this upside, though, given that the most recent US CPI is right around the horizon. The inclination would be to downplay US dollar declines.

The 0.99 handle serves as support for the euro, and although there has been a breach below it, there hasn't yet been a close below it. The language used, such as expressing a willingness to enter restrictive territory as opposed to merely front-loading policy to play catch-up, will be crucial in determining whether the Euro can find a floor, even though the ECB is preparing to raise interest rates by 75 basis points at its meeting tomorrow.

US Dollar’s Unwavering Strength (EUR/USD), EUR/GBP, USD/JPY Falls To Lowest Level Seen Since 1998 - 1 EUR/USD Price Chart

GBP declines

The market is reflecting mixed signals for this currency pair. The Bank of England enters the scene and hits the already weak pound just as the market was concentrating on the new prime minister, Liz Truss. Following comments made by members of the Bank's Monetary Policy Committee (MPC), markets quickly reduced their expectations for a 75 basis point interest rate hike at next week's policy decision, causing a steep decline in the value of the pound. The panel's comments show that the Bank is still hesitant to hike interest rates in order to combat inflation and instead is betting that prices would decline as the economy weakens.

US Dollar’s Unwavering Strength (EUR/USD), EUR/GBP, USD/JPY Falls To Lowest Level Seen Since 1998 - 2 EUR/GBP Price Chart

USD continues to strengthen

Today, the Japanese Yen's value against the US Dollar fell to its lowest level since 1998. In order to keep bond yields low, the Bank of Japan (BoJ) reaffirmed its yield curve control (YCC) program on Wednesday, despite the Fed's unambiguous indication that rates will rise. Today, the 10-year Japanese government bond (JGB) traded close to the 0.25% upper limit set by the central bank. The bank then declared that they would increase their bond buying as part of their planned operations. The 2-year note currently trades at 3.75%, with Treasury rates continuing to fly higher. Everywhere it has increased, the US dollar has.

US Dollar’s Unwavering Strength (EUR/USD), EUR/GBP, USD/JPY Falls To Lowest Level Seen Since 1998 - 3 USD/JPY Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

The Japanese Yen Has The Worst Performer Among The G-10 Currencies

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.