Asian currencies hit bottom: Pressure from the Fed
USD Rises on U.S. Economic Strength and Trump’s Tax Policies, Dragging Asian Currencies to a 20-Year Low
Asian currencies fell to their lowest levels in 20 years as the USD maintained its strong position, fueled by the U.S.'s superior economic growth and President-elect Donald Trump's commitment to raising import taxes.
The Bloomberg Asia Dollar Index dropped to 89.0409 on Monday, the lowest since data began in 2006. The USD rally has been supported by the Federal Reserve's cautious stance on interest rate trajectories and expectations that Trump’s tax policies will exert inflationary pressures.
“USD will continue to appreciate against Asian currencies, but the degree will vary across countries,” said Alvin T. Tan, Head of FX Strategy at the Royal Bank of Canada. He noted that if U.S. trade protectionism materializes, it could be a "game-changer." Asian central banks might respond by allowing their currencies to depreciate in a controlled manner.
The Bank of Japan (BoJ) is drawing global investors’ attention as one of the few major central banks maintaining a tight monetary policy amidst a trend of easing. With plans to hike interest rates at least once in 2025, BoJ’s move is expected to have positive effects on the banking sector.
Notably, while BoJ intends to raise rates, the interest rate gap between Japan and major economies, especially the U.S., is expected to remain significant. This could put downward pressure on the yen, while simultaneously providing a competitive advantage to Japanese exporters. However, a potential risk lies in increased selling pressure on Japanese government bonds if BoJ opts for quantitative tightening.
Trading Strategy
The main trend for USDJPY remains strongly bullish in the long term, so it’s recommended to focus on buying at lower support levels to optimize profits and align with the dominant trend.
Strategy
Buy Zone: 157.200
Stop Loss (SL): 156.600
Take Profit (TP): 157.900
Sell Zone: 158.800
Stop Loss (SL): 159.300
Take Profit (TP): 158.000
Pay attention to full TP SL to protect your trading account
Asian currencies fell to their lowest levels in 20 years as the USD maintained its strong position, fueled by the U.S.'s superior economic growth and President-elect Donald Trump's commitment to raising import taxes.
The Bloomberg Asia Dollar Index dropped to 89.0409 on Monday, the lowest since data began in 2006. The USD rally has been supported by the Federal Reserve's cautious stance on interest rate trajectories and expectations that Trump’s tax policies will exert inflationary pressures.
“USD will continue to appreciate against Asian currencies, but the degree will vary across countries,” said Alvin T. Tan, Head of FX Strategy at the Royal Bank of Canada. He noted that if U.S. trade protectionism materializes, it could be a "game-changer." Asian central banks might respond by allowing their currencies to depreciate in a controlled manner.
The Bank of Japan (BoJ) is drawing global investors’ attention as one of the few major central banks maintaining a tight monetary policy amidst a trend of easing. With plans to hike interest rates at least once in 2025, BoJ’s move is expected to have positive effects on the banking sector.
Notably, while BoJ intends to raise rates, the interest rate gap between Japan and major economies, especially the U.S., is expected to remain significant. This could put downward pressure on the yen, while simultaneously providing a competitive advantage to Japanese exporters. However, a potential risk lies in increased selling pressure on Japanese government bonds if BoJ opts for quantitative tightening.
Trading Strategy
The main trend for USDJPY remains strongly bullish in the long term, so it’s recommended to focus on buying at lower support levels to optimize profits and align with the dominant trend.
Strategy
Buy Zone: 157.200
Stop Loss (SL): 156.600
Take Profit (TP): 157.900
Sell Zone: 158.800
Stop Loss (SL): 159.300
Take Profit (TP): 158.000
Pay attention to full TP SL to protect your trading account
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