The index trades above the 200-day simple moving average towards 104.70 and the 61.8% Fibonacci retracement of the late 2023 selloff.weakened in Q1 as contrasting economic performance between the EU and the US developed further. In addition, the dollar benefits from a superior interest rate differential which tends to benefit higher-yielding currencies during periods of low volatility as investors seek to borrow lower yielding currencies to invest in higher yielders.
Sterling has held up well against the high-flying greenback, boasting a bank rate of 5.25% which coincides with the lower band of the Fed funds rate . On the weekly chart below, the same projection has been applied, mapping out potential upside and downside moves derived from the average move over the last two quarters.
Upside levels of note include the 61.8% Fib retracement at 1.2756, followed by the 1.2960 marker which would invalidate a bearish GBP/USD Outlook.has probably been the most publicised currency pair in Q1 due to the momentous decision from Bank of Japan officials to step away from negative interest rates. Signs of persistently high inflation coupled with the fastest rising wagewitnessed over the last 30 years, emboldened the Bank to finally hike interest rates.
Therefore, USD/JPY upside may be short-lived and remains a very risky trade above 150.00. Nevertheless, upside projections based off of quarterly moves for the last two quarters presents the ambitious topside move to 160.00 but, in reality, each 100 pips move above 150.00 appears more unlikely.