US DOLLAR OUTLOOK: USD/JPY IN FOCUS HEADED INTO CONSUMER SENTIMENT REPORT RELEASE
- US Dollar traded broadly mixed across major currency pairs during Thursday’s session
- DXY Index continues to gravitate around its 50-day moving average as selling pauses
- USD/JPY price volatility could get a jolt from potentially high-impact sentiment data
- Learn more about technical analysis or implied volatility trading strategies
The US Dollar lacked direction and traded broadly mixed on Thursday. USD price action strengthened modestly against the Pound and Yen, but weakened against the Australian Dollar and Euro. On balance, the DXY Index finished roughly flat as US Dollar bears and bulls continue to battle for direction near the 50-day simple moving average.
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (16 OCT 2020 TO 11 FEB 2021)
Chart by @RichDvorakFX created using TradingView
This has given pause to the latest stretch of US Dollar selling pressure, which corresponded with a breakdown of the relative strength index and invalidation of the short-term bullish trend formed from the 06 January and 26 January lows. Failing to maintain altitude around the 50-day simple moving average could see a resumption of US Dollar weakness that steers the DXY Index down to its bottom Bollinger Band. A last ditch effort by US Dollar bulls to rekindle recent rebound efforts could see the 91.00-price level come into play as a potential topside objective.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
US Dollar overnight implied volatility readings have cooled off quite a bit. USD/JPY has one of the lowest implied volatility readings at 4.0%, which ranks in the bottom 10th percentile of readings taken over the last 12-months and is also below its 20-day average of 4.8%. This brings to focus the monthly consumer sentiment report on deck for release tomorrow, 12 February at 15:00 GMT as a potential catalyst for volatility. That said, USD/JPY price action could ‘lead the way’ so to speak in terms of where the broader US Dollar heads next.
| Change in | Longs | Shorts | OI |
| Daily | -11% | -3% | -5% |
| Weekly | -19% | -3% | -6% |
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
