Fundamental
Overview
The USD got a boost last
week from the strong US PMIs which lifted Treasury yields and put in
question the rate cut in September. Once the market digested the report and saw
that there was more good news on the growth side than bad news on inflation,
the USD strength faded.
The USD held the gains
against the JPY because the data was still supportive for the Fed’s higher for
longer stance and the positive risk sentiment. Both the scenarios are negative
for the Yen, so 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 and lead to some risk-off sentiment.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY continues to rise slowly into the intervention level at 160.00
as the lack of recessionary US data keeps the Yen on the backfoot. From a risk
management perspective, the buyers will have a much better risk to reward setup
around the trendline,
but we will likely need some big miss in the US data to trigger such a
correction.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that the price has been consolidating around the 157.00 handle as the general
USD weakness put a lid on further gains. There’s a good support for the buyers
around the minor trendline where we can also find the 38.2% Fibonacci
retracement level for confluence.
The sellers will want to see the price breaking below the trendline to extend
the correction into the major trendline next.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see more clearly the rangebound price action of the last few days. A break
below the 156.51 level should see the sellers piling in to position for a drop
into the minor trendline. On the other hand, a break above the 157.20 level
will likely increase the bullish momentum with the buyers increasing the bets
into the 158.00 handle.
Upcoming
Catalysts
Today we get the US Consumer Confidence
report where the focus will likely be on the labour market details and weak
data should give the Yen a boost in the short-term. On Thursday, we will see
the latest US Jobless Claims figures. Finally on Friday, we conclude the week
with the Tokyo CPI and the US PCE reports.
