Fundamental
Overview
The USD continues to
consolidate around the highs except against the commodity currencies where it
extended into new highs. The US inflation data last week was once again a
disappointment although the data that feeds into the Core PCE was overall
benign as forecasters expect a 0.13% M/M increase.
Nonetheless, the Treasury
yields continue to climb and are now back around the post-US election highs.
There’s some understandable uneasiness in the bond market given the hot US data
and the Fed continuing to cut into an accelerating economy.
On the JPY side, the market
increased the probabilities for no change at this week’s BoJ decision following
a report from Bloomberg last week saying that the central
bank sees little cost of waiting for the next rate hike.
This is not something new
as the market was already leaning for no change, but the JPY weakened across
the board, nonetheless. Most of the USD/JPY gains though can be attributed to
the rise in Treasury yields with the focus now switching to the FOMC Policy
Decision on Wednesday.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY broke above the key 151.90 level and extended the rally into
the 154.00 handle. From a risk management perspective, the buyers will have a
better risk to reward setup around the 151.90 support
to position for a rally into the 160.00 handle next. The sellers, on the other
hand, will want to see the price breaking lower to target a drop into the
149.40 level.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have an upward trendline defining the current bullish
momentum on this timeframe. The buyers will likely lean on the trendline with a
defined risk below it to position for a rally into new highs, while the sellers
will look for a break lower to target the 151.90 support.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that we have a nice minor support zone around the 152.80 level where there’s
the confluence with the trendline. This is where we can expect the buyers stepping
in to position for new highs, while the sellers will look for a break lower to
target the 151.90 support. The red lines define the average daily range for today.
Upcoming
Catalysts
Today, we have the US Flash PMIs. Tomorrow, we get the US Retail Sales data. On
Wednesday, we have the FOMC Policy Decision. On Thursday, we have the BoJ Rate
Decision and the US Jobless Claims. On Friday, we conclude with the Japanese
CPI and the US PCE data.
