It was a relatively quiet session in terms of headlines, with some minor movements in the market overall. A slight rebound in risk mood keeps the dollar stable, and this improvement continued for most of the session. UnitedHealth reported weak first-quarter earnings and lowered its earnings forecast, sending Dow Jones futures lower late, slightly impacting market sentiment. Dow Jones futures turned negative after the news, falling more than 1%, as UnitedHealth formed Of course about 9% of the index – the largest by weight.
However, S&P 500 futures rose 0.4%, led by technology stocks. Nasdaq futures are currently up 0.7%.
In the foreign exchange market, the dollar is recovering slightly after yesterday’s declines. EUR/USD fell 0.3% to 1.1365, while USD/JPY rose 0.5% to 142.55 on the day. USD/CHF continues to hold steady away from recent lows, up 0.5% to 0.8170 on the day. Meanwhile, USD/CAD rose 0.3% to 1.3890, and the USD/CHF pair fell AUD/USD up 0.2% to 0.6358 at the moment.
In other markets, the bond market continues to hold, while gold is retreating slightly after hitting new highs yesterday. However, the precious metal remains stable above USD$3,300, showing no signs of retreating. If the latter comes early, it will be the next blow that will weaken risk sentiment. But if the first option is the right one, markets may at least start to be optimistic.
Under the current situation, it is still necessary to keep an eye on Trump/Trump trade headlines and, at the same time, see how tariffs will continue to affect the global economy during this period.
Anticipation of Japanese inflation data puts pressure on the dollar
The US dollar continues to see a lot of noisy behavior, as we try to work with the idea of the US dollar being oversold, and therefore, we may see the markets slow down a bit.
Japan’s inflation data for March will be released on Friday, April 18, and core inflation and core-core inflation are expected to gradually rise to 3.2%y/y (from 3.0%) and 2.7%y/y (from 2.6%), respectively. A stronger-than-expected reading will support the Bank of Japan’s gradual stance on tightening and could narrow the implied interest rate differential between the US and Japan.
The daily MACD spread and signal line continued to widen to the lower (below the zero midline), supporting the continuation of the medium-term downtrend phase of the USD/JPY. Watch the medium-term pivot resistance at 147.30, and a breach of the 140.30/140.00 medium support zone could continue the series of impulsive declines, revealing the next medium-term support at 137.10/136.50 and 134.20/133.75.
However, a breach of 147.30 would negate the bearish tone, leading to a corrective rebound towards the next medium-term resistance levels at 151.40 and 154.15.
US President Trump’s positive speech after the conclusion of the first session of the US-Japan Trade Negotiations Dialogue yesterday, April 16, supported the recovery of the US dollar. On his social media account, Trump praised “significant progress.”
For now, markets are keeping calm. At this point, we will either see positive developments in trade first, or strong data showing the negative impact of tariffs first. If the latter comes early, it will be the next blow that will weaken risk sentiment. But if the first option is the right one, markets may at least start to be optimistic.
USD/JPY Weakens as Spreads Narrow, Trade Optimism Curbs
Since our last publication, USD/JPY has seen an expected rebound of 1.3%, hitting an intraday high of 151.21 on March 28, slightly below the pivotal medium-term resistance level of 151.50 highlighted in our analysis.
After that, the pair saw a sharp, multi-week decline of 6.3%, hitting a seven-month low of 141.64 on Wednesday, April 16, weighed down by uncertainty over the application of various types of US tariffs, and escalating tensions between the US and China, which increased the risk of a slowdown in global economic growth, which in turn boosted safe-haven currencies such as the Japanese yen and the Swiss franc.
The Japanese yen has weakened recently since the start of the Asian trading session on April 17, with USD/JPY rising 0.6% to an intraday high of 143.08 at the time of writing.
US President Trump’s positive speech after the conclusion of the first session of the US-Japan Trade Negotiations Dialogue yesterday, April 16, supported the recovery of the US dollar. On his social media account, Trump praised “significant progress”.
In contrast, Ryusi Akazawa, the key Japanese official involved in the trade talks, and the minister of economic recovery, was not very optimistic, as he stated that Japan will schedule the next consultations with the United States during this month, indicating that obstacles and disagreements remain after the first round of trade negotiations yesterday.
The implied interest rate spread between the US and Japan, projected through December 2025 via short-term interest rate futures, narrowed to 2.86% from 3.20% three months ago.
This continued tightening of the yield spread may lead to further downward pressure on USD/JPY, in line with historical correlations.
