Fundamental
Overview
Last week, we saw
the USDJPY pair falling after the US CPI report as the market shrugged off rate
hikes fears and consolidated the Fed’s higher for longer stance. The following
day, the JPY started to lose ground again as not only the interest rates
differential remains strong, but we have also the positive risk sentiment due
to global growth expectations.
In such an
environment, the JPY 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 the USDJPY pair is trading in the middle of the major trendline
and the 160.00 handle. The price rallied above the key 155.00 level again
recently which is acting as a kind of barometer for the sentiment on the pair
with the price staying above being more bullish and below it being more
bearish.
USDJPY
Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour
chart, we can see that more clearly the rally above the key 155.00 level
following the US jobless claims figures and then an extension to the 156.00
handle. We can notice that the 156.00 level has been a strong resistance,
so a break above it should see the buyers increasing the bullish bets into the
156.80 level next.
The sellers, on
the other hand, are likely leaning on this resistance with a defined risk above
it to position for a drop into the 155.00 level targeting a break below it. If
we do get another pullback into the 155.00 level, we can expect the buyers to
pile in again and target a rally into the 160.00 handle.
Upcoming
Catalysts
This week is pretty empty
on the data front with the only highlight being the US PMIs on Thursday.