Technical Analysis

Dollar limps to the finish line but is by far the lead gainer in 2022

With only three trading days left before the turn of the year, let’s take a look at how the dollar has performed against the rest of the major currencies bloc during the course of 2022.

  • vs EUR: +6.5%
  • vs JPY: +16.5%
  • vs GBP: +11.1%
  • vs CHF: +2.0%
  • vs CAD: +7.0%
  • vs AUD: +7.1%
  • vs NZD: +8.3%

Those are some hefty gains, especially with double-digit percentages against the yen and pound, despite the fact that we have seen a strong retracement over the past two months – USD/JPY in particular.

It’s one of those years where it was slightly easier to hold longer positions, although there were volatile episodes in between. In thinking back to how trading sentiment has behaved since August, it was even more apparent that the volatility swings and back-and-forth action were the dominant themes.

If I had to pick one dollar pair that has stood up, I would unfortunately go with the unimaginative one in USD/JPY.

The pair had a monstrous rise after the break above 118 all the way to 150 (that’s 3,200 pips by the way), during which we saw Japan authorities intervene to buy up the yen for the first time since 1998 at around the 145 mark at first.

After that came the focus on softer inflation figures in the US and markets hoped for a softer language from the Fed, in which Powell then delivered ahead of the FOMC meeting in December.

That culminated with a drop in the pair towards 135 before the BOJ finally relented and tweaked its yield curve control policy, although policymakers cited “market functioning” as the main reason. However, traders took to the more “hawkish” decision with a drop to test the 16 June lows at 131.49 before we saw a bit of a bounce in the past week or so.

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