- USD/JPY has turned bearish tanking to four days lows amid dollar weakness across the board.
- In the equity markets, major indices remain under pressure amid rising inflation concerns.
- Cryptocurrencies are also under pressure in the aftermath of Elon Musk’s rhetoric about Tesla BTC holdings.
The Japanese yen continues to strengthen against the dollar, sending the USD/JPY to four-day lows. The greenback remains on the back foot following disappointing U.S. retail sales that affirmed Federal Reserve continued dovishness.
Investors have continued to slash their bets on the dollar following an earlier lift-off triggered by higher than expected inflation data. Focus in the currency market is on the much-awaited FOMC policy meeting report on Wednesday.
In the meantime, the yen continues to gain ground forcing the USD/JPY pair to drop below 109.00.
The pair could slide to the 108.30 level, seen as the next substantial support level. A breach of the support level could result in a further slide, probably back to the 107.45 level.
The strengthening of the yen against the greenback remains unaffected by weaker than expected Japanese GDP data. The latest data indicates the Japanese economy contracted 1.3% in the first quarter and 5.1% year-over-year.
The EUR/GBP pair, on the other hand, has steadied in the 0.85720 and 0.8620 range in the aftermath of the U.K. easing lockdown restrictions. The sterling gained ground in recent weeks against the common currency amid growing expectations that the U.K. economy will bounce back much faster from the COVID-19 induced slowdown.
The Pound has continued to hold steady against the Euro even on the European Central Bank upgrading the block’s economic outlook. However, the lack of notable economic data has left the EUR looking for direction amid a strengthened pound.
Silver & gold rally
Silver powered to three and half months high in the commodities market as it benefited from a weakened U.S. dollar. XAG/USD rose to highs of $28 as Gold also powered to three and half months high above the $1870 an ounce level.
Silver recent upside action could also be attributed to increased demand as an industrial metal. The reopening of the world economies from the COVID-19 lockdowns has once again triggered demand as the metal is commonly used in electrical and thermal conductivity.
After the recent spike high, the XAG/USD pair could be headed to the $29 handle seen as the next substantial level given the strong upward momentum.
With the U.S. targeting net-zero emissions by 2050, Silver could experience an increase in demand given its use in enabling a green economy through solar panels.
U.S. equity sell-off
It is building to be yet another volatile season in the equity markets, with major counters struggling to bounce back after a recent correction lower. U.S. inflation statistics signaling that the Fed could tighten monetary policies is one factor that continues to weigh heavily on sentiments.
Last week the Dow Jones Industrial lost 1.4% as the S&P 500 fell 1.75, and the tech-laden NASDAQ posted the biggest slide of 3%. The S&P 500 remained under pressure at the start of the week, dropping 10.56 points as the Dow Jones Industrial Average fell 0.2%. The NASDAQ was down 0.4%.
In the cryptocurrency market, Bitcoin, Ethereum, and Dogecoin remained under pressure at the start of the week. BTC/USD was the biggest loser, dropping by more than 10% to three-month lows at $42,000.
Bitcoin sell-off came on Tesla CEO Elon Musk, rattling the crypto market by suggesting Tesla might have offloaded all its Bitcoin holdings. While the crypto enthusiast did later quash the concerns, the damage had been done, and the crypto was struggling to rise past the $46,000 level.
Ethereum was another casualty tanking from the $4,000 level to two-week lows of $3,100. Dogecoin was also not spared and remains under immense selling pressure after a 30% plus sell-off from all-time highs.
Dogecoin has since struggled to bounce back past the $0.50 level as it remains under pressure in the aftermath of Musk terming it a hustle coin.