USD/JPY Bulls Push Above 111.00 Amid Broad Dollar Strength

2 min read
24 Jun, 21
Written by Clover4X
Article Highlights:
  • The US dollar moves further against the Japanese yen, trades at a one-and-a-half year high
  • The USD/JPY is among the top performers of the year, higher by 8%.

USD/JPY Bulls Push Above 111.00 Amid Broad Dollar Strength

The USD/JPY pair has been ticking higher for the past three consecutive days. Rising from a low of 109.71 on Monday, the exchange rate is so far having a relatively strong week, currently trading at 111.05, up 1.20% on the week.

Several factors are contributing to the pair’s upside momentum in the short term. Among them, a US dollar boosted by Fed speakers narrating a rosy outlook for the US economy despite higher inflation. In addition, the Japanese yen this week has been steadily depreciating across the currency board as market participants are piling into the euro, the sterling, and the greenback.

The US dollar is still building on its gains from last week when Federal Reserve Chairman Jerome Powell announced the central bank is planning to raise interest rates two times by 2023. Since the Fed statement was released, the US dollar has invalidated the conventional hypothesis that a currency should devalue if it’s threatened by rising inflation.

The Dollar Advances

Instead of dropping on the news that the US is now experiencing a 5% inflation, as per May’s consumer price report, the dollar turned the narrative and advanced against its peers. This week, the greenback is extending its rally against the Japanese yen and is currently trading at a 16-month high, currently floating above the 111.00 marks. The last time the USD/JPY hovered that high was during the March 2020 market meltdown when the coronavirus swept the financial markets.

The USD/JPY has been in a solid bull run this year. Going back to January 2021, the pair opened for trading at levels around 103.00. Year-to-date, the pair has appreciated almost 8%, a feast few currency pairs have been able to achieve. Another top-performer exchange rate for this year is the GBP/JPY pair. The Sterling has advanced nearly 11% against the Japanese yen. The CAD/JPY pair is even higher, up 12% year-to-date.

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