Impact of French Elections on USD/JPY Forecast
The USD/JPY saw a decrease from its recent highs after reaching a multi-decade high above the 161 level. Despite Japan’s threats of intervention, the yen remained under pressure against other major currencies. The attention was then focused on the May Core PCE index for USD/JPY, but this data did not significantly impact the markets as it aligned with estimates. More US economic data is expected in the upcoming weeks, with the June non-farm jobs report followed by the CPI report in mid-July. However, the French elections over the weekend pose a more immediate concern.
French Election Uncertainty and Stock Market Performance
European markets, particularly in France, were experiencing underperformance compared to Wall Street ahead of the French elections. While the S&P 500 hit a new record high and was on track for a fourth consecutive week of gains, French stocks were struggling with the CAC index testing its lowest levels since January. The potential for instability in the markets post the elections is a cause for concern.
Technical Analysis and USD/JPY Forecast
The USD/JPY recently reached a 38-year high, surpassing the MOF intervention level and the 160 level. The strong performance of other JPY crosses like EUR/JPY, GBP/JPY, and AUD/JPY are putting pressure on the yen. A reversal of this trend would require significant market developments. In terms of technical analysis, the focus is on defending the 160 level, followed by the bullish trend line at 157.70 – 158.00. There are no clear resistance levels, so key levels to watch include 161.00, 162.00, and the 127.2% Fibonacci extension near 162.50.
Source : www.cityindex.com