USD/JPY: dollar is preparing to test the psychological level
The USD/JPY currency pair is developing a moderate "bearish" vector of value, within the framework of the correction phase after a significant rise recorded last Friday. On the previous day, the currency instrument reached the highest level since October 20, 2022, approaching the key psychological threshold of 150.00. Traders continue to be anxious about the Bank of Japan's potential intervention in the yen's fluctuations, as it did in the previous year. Bank of Japan officials are currently taking a wait-and-see stance, however, recent statements from the head of this financial institution, Kazuo Ueda, have been entirely focused on discussing the inflationary situation.
Today's easing of US Dollar-related tensions is partly due to anticipation of upcoming speeches by senior US Federal Reserve officials, including Chairman Jerome Powell. FX market participants are expecting to hear additional indications of possible interest rate hikes in the coming months. This expectation is based on recent remarks by Neel Kashkari, Chairman of the Federal Reserve Bank of Minneapolis, who has already energized the bull market with his previous comments. There is also growing concern among market participants about the situation regarding the U.S. budget passage for the next fiscal year. Just as many issues still cannot be agreed upon, the Senate has been asked to approve a temporary funding bill to avoid a federal government shutdown starting October 1.
- Resistance levels: 149.69, 150.00, 150.50, 151.00.
- Support levels: 149.00, 148.47, 148.00, 147.36.
USD/TRY: lira's decline continues
During the Asian trading session, the USD/TRY currency pair shows moderate strengthening, approaching 27.3525. On the previous day, the pair reached an all-time high near 27.8100, thanks to the strengthening of the dollar.
The Turkish lira is under pressure due to domestic economic factors. Despite decisive measures of the Turkish Central Bank to tighten monetary policy, the lira failed to strengthen its position. Inflationary concerns continue to rise even though the regulator has raised the key rate four times since June, totaling 21.5%. In August, the inflation rate settled at 9.09% month-on-month and 58.94% year-on-year. According to officials, high domestic demand, changes in wage levels, exchange rates, and the rising cost of energy resources and services are contributing to the rise in inflation. In light of this, the USD/TRY currency pair has added 2.6% over the past month, and is up about 48.0% year-to-date. Turkey's central bank aims to reduce inflation to 5.0% by 2024.
- Resistance levels: 27.5000, 27.7500, 28.0000, 28.2500.
- Support levels: 27.2166, 27.0000, 26.7500, 26.5000.
Silver Price Analysis
Along with the strengthening economic situation in the USA, which exceeded the initial forecasts, the precious metals market is facing sales. The reason for this is investors' preference in favor of the dollar, given the current policy of high interest rates of the US Federal Reserve and their probable further retention at high levels. The XAG/USD pair is now at 22.57.
Last week, the Federal Reserve did not change the level of interest rates, leaving them at 5.50%. There were also signals about the possibility of one more rate hike in the current cycle before the monetary policy review begins. This caused the dollar to strengthen against other currencies, which in turn sent silver down 2.50%. However, Chinese investors actively buying gold may give a boost to the value of other precious metals. At the moment, the precious metals market in China is showing record highs of over $100.0 per ounce compared to the ten-year average of $6.0.
- Resistance levels: 23.60, 24.35, 25.20.
- Support levels: 22.64, 22.18, 20.95.
Crude Oil Market Analysis
Brent Crude Oil prices surpassed the 96.00 threshold and are moving towards 100.00 after the Cushing inventory level fell to an alarming low, highlighting the global decline in fuel supply.
Data on hydrocarbon reserves in the United States, published yesterday, showed that over the last week their volume decreased by 2.170 million barrels, which was below expectations, which suggested a decrease of 1.320 million. At the same time, the indicator for Cushing, a key hub of oil supplies in the United States, decreased by 0.943 million, reaching the lowest values since the summer of 2022. Experts agree that this trend is a result of Saudi Arabia and Russia's actions under OPEC+, which impose restrictions on production, causing a shortage. Due to rising demand, many nations are actively using their oil reserves to avoid a sharp price spike. Since the summer months, the cost of Brent Crude Oil has risen approximately 28% and continues its climb.
OPEC's outlook also plays in favor of rising oil prices: the organization is forecasting an oil deficit of 3.0 million barrels per day in the fourth quarter. Given the stable demand in China and the US, experts assume that prices may overcome the psychological boundary of 100.00.
- Resistance levels: 95.60, 100.10, 104.50.
- Support levels: 92.05, 87.64, 82.50.