In the New York Foreign Exchange Market on the 3rd, the dollar-yen held firm. As of 2:00 a.m., it stood at 158.51 yen per dollar, about 24 sen stronger for the dollar and weaker for the yen compared with the 12:00 a.m. reading (158.27 yen). There was a moment when it extended gains to 158.61 yen, the highest since October 20, though buying momentum showed signs of running its course. Still, the downside was limited to around 158.42 yen, keeping it in the upper half of the 158 yen range.
What supported the return to a stronger dollar and weaker yen was the move in U.S. interest rates. The U.S. 10-Year Treasury Yield, which had temporarily fallen to the 4.92% range, recovered to the 4.95% range. In the stock market as well, the Dow Jones Industrial Average, which had fallen more than 390 dollars after the open, pared its decline to around 80 dollars at one point, and the retreat in risk aversion led to dollar buying and yen selling.
EUR/JPY moved firmly. As of 2:00 a.m., it stood at 177.40 yen per euro, about 18 sen stronger for the euro and weaker for the yen from the 12:00 a.m. reading (177.22 yen). As with the dollar-yen, yen selling was dominant, and it hit 177.43 yen, the highest since October 22.
Meanwhile, EUR/USD traded in a range lacking direction. As of 2:00 a.m., it stood at 1.1192 dollars, about 0.0005 dollars weaker for the euro from the 12:00 a.m. reading (1.1197 dollars). It pushed down to 1.1175 dollars, the day’s low level, but did not reach a new low, returning to the 1.1190 dollar range as price action remained unsettled.
The reference ranges so far today are as follows.
| Currency Pair | Range |
|---|---|
| Dollar-yen | 157.75 yen – 158.61 yen |
| EUR/USD | 1.1175 dollars – 1.1207 dollars |
| EUR/JPY | 176.52 yen – 177.43 yen |
Note: Based on information as of 2:00 a.m.
At the same time the previous day, the 2nd, the dollar-yen was at 157.81 yen, trading in the upper 157 yen range while resisting declines. Following a halt in the decline of WTI crude oil futures, the U.S. 10-Year Treasury Yield narrowed its decline to the 4.91% range at one point, and the dollar-yen also recovered to around 157.90 yen, but as the rebound in crude oil futures remained limited, long-term U.S. interest rates fell again to the 4.87% range, and the rebound lacked strength. On this day, with U.S. interest rates recovering to the 4.95% range, the dollar-yen shifted its level up to the mid-158 yen range.
Many in the market believe that the direction of long-term U.S. interest rates will continue to dictate the direction of the dollar. If the recovery in interest rates pauses, the recent high of 158.61 yen is likely to be seen as upside resistance. For EUR/JPY as well, the focus will be on whether it can maintain its high range in the lower 177 yen level amid the continuing yen-selling trend.
finance.biggo.com