The Japanese central bank and the US Federal Reserve continue to raise the pace of US interest rates sharply this year, supporting the bulls’ control over the direction of the USD/JPY currency pair. It is stable around its highest in 24 years. As for the closing last week, the dollar-yen pair has been stabilizing since the start of the week’s trading around the 135.50 resistance. This may remain until interaction with the content of the testimony of US Central Bank Governor Jerome Powell this week.

Coinciding with the start of trading this week, the Japanese Prime Minister and BoJ chief reiterated on the united front on foreign exchange matters after a meeting that followed the Japanese yen’s plunge last week to a 24-year low against the dollar. Japanese Prime Minister Fumio Kishida said Bank of Japan Governor Haruhiko Kuroda expressed concern about the Japanese currency’s movements during the meeting, a comment that briefly boosted the yen. For his part, Kuroda said that the government and the BoJ will continue to monitor the performance of the forex market closely and cooperate to act appropriately.

The governor added that Kishida did not make any specific comments during the talks, a remark indicating tacit government approval of the BoJ’s decision last week to maintain ultra-low interest rates, even if it was contributing to the currency’s weakness. The meeting is the latest expression of concern about moves in the forex markets by policy makers in Japan as they seek to limit the pace of the yen’s slide through verbal warnings rather than direct action.

Commenting on what was reported, Marie Iwashita, chief market economist at Daiwa Securities, said, “The government and the Bank of Japan should have shown their cooperation again” ahead of next month’s elections. “The fact that they said they would work together and act appropriately” means there is room left for policy responses, she added.

Weekend polls have shown a further drop in popular support for the Japanese prime minister as public concern mounts over price hikes ahead of the July 10 upper house elections. Kishida is almost certain to win the vote given the divided nature of the opposition but will want to do well to bolster his leadership of the ruling party. Overall, the BoJ’s insistence on maintaining easing to support the Japanese economy and fuel stable inflation contrasts with the wave of interest rate hikes sweeping the world’s central banks as they try to tackle the accelerating rates. The BoJ’s dovish policy stance compared to the hawkish Federal Reserve was contributing to the currency’s decline.

According to the technical analysis of the pair: the stronger bulls dominate the general trend of the USD/JPY currency pair, and stability around the top in 24 years confirms this. So far, investors will not care about the arrival of technical indicators towards overbought levels after the recent gains. There is much interest in the path of tightening the global central bank policy led by the US Federal Reserve, which supports the US dollar continuously. Jerome Powell will determine the path for this week. The closest targets for the bulls are currently 135.75, 136.20 and 137.00, respectively.

According to the performance on the daily chart, there will not be a break in the general trend of the dollar / yen pair without breaching the 130 support level again.

The recent profit-taking sell-offs, especially after the US Federal Reserve’s recent announcement, the price of the USD/JPY currency pair did not come out of the general upward trend. 

The USD/JPY pair moved to the 131.49 support level, but soon the bulls moved in the general direction and rose to the resistance level is 135.42 at the end of last week. It is settling around the level of 135.40 at the beginning of this week’s trading. As I mentioned before, the future of monetary tightening of global central banks will ultimately remain in favor of a stronger US dollar.

In contrast to what the US Federal Reserve does. Japanese Prime Minister Fumio Kishida said that the monetary easing policy pursued by the Bank of Japan should remain on the right track for now, considering the negative impact of the change on small businesses. “Monetary policy should be judged comprehensively by taking into account the trends of the economy as a whole,” Kishida said before the start of trading on the Fuji Television Network programme. He added that the policy change could increase interest rate burdens on small and medium-sized businesses, which should be taken into consideration.

While the current easing policy is accelerating the weakening of the Japanese yen, which has increased the costs of commodities such as food and energy, Kishida said the government should take measures to stem the price hike. The Bank of Japan on Friday fended off speculation of tightening policy by maintaining the yield curve control program. As a result, the Japanese yen weakened after the decision, adding to concerns about the rising costs of imports for the nation.

Kishida also opposed a call by some opposition parties for a nuclear-powered submarine, saying that it would probably not be justified given the high costs of the submarines. Japan is already rolling out new submarines, such as the diesel-electric Taiji-class. The Defense Department said in a security white paper that it is looking to establish a fleet of 22 submarines. Separately, support for the Kishida government fell 5 percentage points to 48% in a survey published by the Mainichi newspaper, which showed that respondents are concerned about price hikes.

For its part, the Federal Reserve raised US interest rates by 75 basis points, the largest increase since 1994 and Governor Jerome Powell signaled another big move next month, intensifying the battle to contain rampant inflation. Powell and colleagues recently criticized their efforts to cool prices by raising the target range for the federal funds rate to 1.5 percent to 1.75 percent, after being criticized by critics for not anticipating the fastest price gains in four decades, and then for being too slow to respond.

Jerome Powell added that another increase in the US interest rate by 75 basis points, or a movement of 50 basis points, was likely at the next meeting of policy makers. They expected US interest rates to rise further this year, to 3.4 per cent by December and 3.8 per cent by the end of 2023. This was a significant upgrade from the 1.9 per cent and 2.8 per cent they set for their forecasts in March.

On the economic side, late last week, a University of Michigan survey showed that US consumer inflation expectations are pushing higher. The pollsters expected inflation to rise by 5.4 percent next year, the highest level since 1981. Long-term price expectations have also rebounded.

According to the technical analysis of the pair: the general trend of the USD/JPY currency pair is still bullish. Investors will not care about the arrival of technical indicators towards overbought levels, after the recent gains that reached its highest in 24 years. Much interest in the path of tightening the policy of global central banks, which is led by The US Federal Reserve, supports the US dollar on an ongoing basis. The closest targets for the bulls are currently 135.75, 136.20 and 137.00, respectively.

On the other hand, the general trend will not be broken without breaching the support level 130, the psychological top previously.

Spot natural gas prices (CFDS ON NATURAL GAS) continued to rise during the recent trading at the intraday levels, to achieve new daily gains until the moment of writing this report, by 1.35%. It settled at the price of 5.842 dollars per million British thermal units, after its rise in trading yesterday and for the fourth day on respectively, at a rate of 1.03%.           

Monday’s early production data pointed to a significant increase in production in the United States to its highest levels in a year to date. The increase comes on the heels of last week’s monthly production report from the Energy Information Administration (EIA) which showed a smaller-than-expected drop for January. The recovery in production after winter may remain stronger than many expect, which could set the stage for weakness in mid-spring amid a lower storage deficit.

Meanwhile, mild spring weather begins for the next two weeks, with short bouts of cold late in the season soon followed by a return to warmth. At this time of year, it would take significant fluctuations in temperature and demand to move the price significantly.

Meanwhile, US President Joe Biden called on US exploration and production companies to increase production, but producers indicated difficulties in increasing production quickly due to supply chain problems and labor shortages.

This is reflected in the latest rig data from Baker Hughes, data last Friday showed a combined increase of three rigs per week, but activity was well below historical levels as producers use higher returns to pay down debt and return capital to investors.

Technically, the price succeeded in yesterday’s trading in breaching the important resistance level 5.710, which indicates the strength of the bullish trend. This comes when trading along a major bullish slope line in the medium term, in addition to the continuation of the positive support for its continuous trading above its simple moving average for the previous 50 days. We note in the middle of that positive signs appeared on the RSI indicators, despite reaching overbought areas.

Therefore, our expectations indicate that natural gas will continue to rise during its upcoming trading, especially as long as its stability is above the level of 5.710, to target the pivotal resistance level of 6.412.

LUNA/USD created new highs over the weekend and the cryptocurrency continues to maintain its optimistic speculative stance.

LUNA/USD has created new record highs in the past day, and of this morning is showing that it has the ability to remain in sight of apex values. Yesterday’s trading took LUNA/USD above the 118.00000000 juncture, before reversing slightly on apparent profit taking as Terra went to a low of nearly 111.00000000. However after stumbling lower during Sunday’s flurry of activity, LUNA/USD did not sink below lows seen on Saturday.

Incrementally, LUNA/USD continues to hammer away at record highs, and as of this writing the cryptocurrency is near the 114.0000000 level.  Terra does move rather fast and has shown it has the capability to have price velocity that can be interpreted as speculatively strong. On the 1^st of April, LUNA/USD was trading near the 98.75000000 price. This after LUNA/USD penetrated the 100.00000000 mark on the 28^th of March and began to challenge highs seen on the 10^th of the month.

A high above 111.000000000 was achieved on the 30^th of March, before LUNA/USD sank to lows in the next two days. This is pointed out to showcase that LUNA/USD does in fact reverse lower and its moves can be substantial, so traders should not expect one way trading avenues upward exclusively. Stop losses and the perception regarding the potential of support levels being tested, and even punctured lower must be considered.

However, LUNA/USD does continue to show it is bullish.  If current support levels can hold, there seems to be a genuine case technically via mid-term charts that Terra can push upwards. The broad cryptocurrency market has continued to also show signs of optimistic life; many of the major cryptocurrencies are challenging important resistance levels and have not suffered volatile moves lower.

Cautious LUNA/USD traders may want to use moves lower to ignite their buying positions. If the 114.00000000 level is maintained by LUNA/USD this would be a positive indicator. Traders may have to be patient. Having touched new highs yesterday, there is the possibility some consolidation should be expected in the short term. Yet the trend in LUNA/USD does look positive, and there seems to be plenty of logical speculative perspective which points to a buying wager. Traders should remain realistic with their price targets when aiming for higher values. As pointed out LUNA/USD is not a one way street. Cashing out profits should they develop, is a solid idea for day traders.

Terra Short-Term Outlook

Current Resistance: 116.19000000

Current Support: 112.58000000

High Target: 119.2500000

Low Target: 110.01000000