Forex Power Rankings: Yen Collapse Coming?

Though major currencies USD, EUR, and GBP moved mostly sideways in the last week, Japanese yen gave up significant ground against the three majors. JPY depreciates as fear around banks dissipates and interest rate projections in the US, UK, and Eurozone pick up once again. One bright spot came from Canada with the CAD able to bounce back against USD and others.

Performance of individual currencies USD, EUR, JPY, GBP, CHF, CAD, and AUD in all their pair combinations against each other is measured and weighted equally when deriving the week-over-week net change found below; currencies are then ranked on their overall percentage net change.

Trend followers might trade in the direction of recent strength or weakness, while contrarians could trade against the trend, For example, trend followers tend to buy the strongest currency, and contrarians tend to sell it.

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1. Canadian Dollar - CAD (+0.9%)

Last week's ranking: #6 (-0.6%)

CAD was able to bounce back slightly against USD and AUD bringing it further from historical lows its flirted with on multiple occasions over the last year - USD/CAD traded above 1.38 (high since May 2020) multiple times in March. Will this be a short-term bounce or a sustained rally for Canadian dollars?

2. British Pound - GBP (+0.6%)

Last week's ranking: #2 (+0.6%)

Amid the reversals in CAD, JPY, and more, British pounds continue to drift higher - once again, GBP/USD nears 1.25. The pound could really extend its gains if the Bank of England requires more interest rate hikes than the US Fed in coming months as interest rate projections across the globe shift wildly.

3. US Dollar - USD (0.0%)

Last week's ranking: #7 (-1.5%)

Coming off last week's USD beatdown, the dollar might take unchanged price action as a win. While the market continues to seem weak relative to EUR and GBP, USD has more than held its own against JPY and AUD in the last week of trading.

4. Euro - EUR (0.0%)

Last week's ranking: #1 (+1.8%)

The euro held onto most of its gains from the prior week as the question becomes whether or not EUR will revert lower to where it's been trading against USD or continue toward a new range above 1.10 in EUR/USD. It's also worth mentioning that EUR/JPY has rallied back to highs for the last several months.

5. Swiss Franc - CHF (-0.1%)

Last week's ranking: #3 (+0.5%)

Swiss franc has been relatively calm, especially against its European counterparts EUR and GBP. CHF traders watch to see if the major currency will break new ground against the US dollar or reverse course - USD/CHF rests near 0.91, which has been the low for the pair since Summer 2021.

6. Australian Dollar - AUD (-0.3%)

Last week's ranking: #5 (-0.5%)

AUD seems quite content to trade at low, but not extremely low, levels against other major currencies. AUD/USD hasn't left the range of 0.66 to 0.68 for more than a day or two in the last month; its range for the last year is 0.62 to 0.76.

7. Japanese Yen - JPY (-1.1%)

Last week's ranking: #4 (-0.3%)

Yen continues to give away gains made earlier in March amid fear in the US and European banking sectors, when the flight to quality brought the Japanese currency higher. JPY - only a few months departed from lows going back several decades - now edges closer and closer to historical lows against EUR, USD, and GBP.