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US Dollar Prints a Fresh Multi-Month High, USD/JPY Consolidates Recent Rally

US Dollar Prints a Fresh Multi-Month High, USD/JPY Consolidates Recent Rally

Nick Cawley, Senior Strategist


What's on this page

US Dollar Price, Chart, and Analysis

  • US Dollar (DXY) bullish channel controls price action.
  • USDJPY rally taking a breather after a week of solid gains.

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The US dollar is moving higher and is currently trading around highs last seen nearly one year ago. A hawkish central bank backdrop is providing the latest positive momentum with the Fed expected to begin tapering in November this year, reducing market liquidity and paving the way to start hiking interest rates further down the line. The Fed will be closely watching next Friday’s US Jobs Report (NFP) for signs that jobs are being created at a sufficient rate to allow monetary tightening to begin. While rates hikes are not expected until the end of 2022 at the earliest, reducing and then finishing QE will tighten monetary conditions via reduced liquidity.

The daily US Dollar basket chart (DXY) shows a basic bullish channel in control of price action with a series of higher lows and higher highs made since late May. The next level of resistance is now at 94.31, the November 4 high which also cuts across current channel resistance.

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US Dollar Daily Price Chart September 29, 2021

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USD/JPY has just retreated from making a fresh 18-month high, consolidating a week of hefty gains, with the pair adding in excess of 250 pips since last Wednesday. The pair now sit in overbought territory with the CCI indicator around a multi-week high, suggesting that USD/JPY needs a period of quiet before it moves higher. Initial support around 110.80.

USD/JPY Daily Price Chart September 29, 2021

Retail trader data shows 24.82% of traders are net-long with the ratio of traders short to long at 3.03 to 1.The number of traders net-long is 13.61% lower than yesterday and 41.86% lower from last week, while the number of traders net-short is 16.60% higher than yesterday and 156.30% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise.Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/JPY-bullish contrarian trading bias.

USD/JPY Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% -3% -2%
Weekly 38% -26% -13%
What does it mean for price action?
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What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.