Pressure Mounts for the Japanese Yen as US Dollar Shows Continued Strength

investing.com:

The US dollar has been back in vogue over the past two weeks as the latest economic data has shown that the US economy remains buoyant.

After volatile movements in the 103 region last week while investors expected the Fed's decision was expected, the greenback continued to rise with the pricing of those who maintained their expectations that the Fed will keep rates higher for longer.

As a result, the DXY which closed the week in the 104 region, is now also technically above a critical resistance.

Considering the 2024 oscillation, the 104.3 level remains a critical resistance according to the Fibonacci measurement after confirming that the short-term downtrend has been broken. After this level, the 104.9 level stands as the next 2nd resistance level, while the current momentum is likely to continue until 105.4, which corresponds to Fib 0.618.

Although the strong US economy is seen as the biggest factor supporting the dollar, the Fed's clear statement that it will cut interest rates for the year will remain the biggest factor suppressing the dollar.

The main issue here is whether Powell will cut interest rates less than the 3 rate cut projection, depending on the economic data throughout the year.

Recently, Atlanta Fed President Bostic said that the expects the bank to cut rates only once this year, by a quarter of a percentage point he said. While this forecast is far from the market's expectation, if Bostic's view gains favor or if the data in the coming months remain strong, the dollar is likely to continue its dominance over other major currencies.

However, in the usual scenario, a rate cut by the Fed in the second quarter of the year could cause a decline in the dollar. This could trigger the index, which could rise