US dollar index increased on the last day of the week. However, it is preparing to close lower in the weekly candle and print its worse week since February with an almost 1.6% weekly loss.
Japanese Yen still giving buy opportunity
US dollar's primary driver was global geopolitical tensions and diversions between the FED and other central banks' monetary policies. The market was also not so worried about the USD rate; as Mr. Powell mentioned earlier this week and after the May Fed meeting, the central bank would push interest rates as high as needed to slow down inflation. His earlier comment about the US dollar rate also was interesting, where he said that FOMC has no limit and red-line for dollar value.
FED policies increased the US dollar rate, but the diversion between the FOMC decisions and policies with other central banks also increased the US dollar demand. For better understanding, compare the 10-years bond yields in different countries. In the US, as you can see in the below figure from the Market watch website is about 2.84%, while in Japan and Germany, it is 0.24% and 0.95%. This means EUR and JPY holders would like to sell them against the US dollar and buy the US bonds. Some other bonds' yields can be higher than the US bonds. However, the lower credibility makes them less attractive.
On the other hand, geopolitical tensions increase, and economic growth is slower. Slower economic growth will decrease the stock market's interests and lift the demand for other markets, including currencies. The Japanese Yen has always been one of the most trusted safe havens, and it can still be attractive. Add that the BoJ dovish policies, which support the economy, and in the long term, a more robust economy creates a stronger currency. Therefore we can say that the Japanese Yen can be one of the most attractive currencies at the current price to be invested.
Overall, we can see that the Japanese Yen moves in areas that can get the buyer's attention. From the technical point of view, USDJPY has strong support at 125.20 and then 211.30, and at the head of them, 126.80 is the first support. Technically, MACD histograms above 0-level become shorter, and price turned under 20 DMA with an average market volume around 20 DMA.