Fundamental
Overview
Despite some
softness against the other major currencies, the USD continued to gain against
the JPY as the Yen remains under pressure from risk-on sentiment due to positive
global growth impulse and the stark yield differential with the Fed, which is
expected to keep rates steady at least until September.
In such an
environment, the Yen is unlikely to catch a sustained bid. The trend will
likely change only when we start to get some recessionary US data that will
make the market to price in a more aggressive rate cut path.
USDJPY Technical
Analysis – Daily Timeframe
USDJPY Daily
On the daily
chart, we can see that USDJPY reached the key swing level at 156.80. A break
above that level would open the door for a rally into the 158.00 handle. The ultimate
target remains the intervention level at 160.00.
That’s where we
will likely see a strong rejection as the buyers will want to square their positions
and the sellers will try to step in with a defined risk above the level to
position for a drop back into the trendline.
USDJPY
Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour
chart, we can see that we have a good support
around the 156.50 level where we can find the confluence
of the trendline and the 38.2% Fibonacci
retracement level. If we get a pullback into the trendline, we can expect
the buyers to step in with a defined risk below it to position for a rally into
the 158.00 handle with a better risk to reward setup.
The sellers, on
the other hand, will want to see the price breaking lower to extend the drop
into the 156.00 handle where we can also find the lower limit of the average
daily range. Such a scenario can be triggered by weak US PMIs, but the
buyers will likely take it as a dip-buying opportunity.
Upcoming
Catalysts
Today we will see the latest US PMIs and Jobless Claims
figures. Tomorrow, we conclude the week with the Japanese CPI report.