Fundamental
Overview
The BoJ eventually decided
to hike rates by 15 bps bringing the policy rate to 0.25%. This move was
expected given that the day earlier we got lots of leaks. Governor Ueda in the
press conference didn’t say too much but it looks like the weak Yen was the main
reason for the rate hike as the economic data hasn’t been supporting such a
move.
After some consolidation,
the USDJPY pair broke through the key 152.00 handle and extended the losses into
the 150.00 price region. There’s been a good argument that most of the moves
we’ve been seeing in the past couple of weeks were driven by deleveraging from
strengthening Yen.
Basically, the squeeze on
the carry trades impacted all the other markets. Given the magnitude of the
recent appreciation in the Yen and the correlation with many other markets, it
looks like this could have been the reason indeed.
It will be interesting to
see how things evolve in the next days and if this correlation fades. Today, we
will also have the FOMC rate decision where the Fed is expected to keep rates
steady and signal a rate cut in September.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY cracked through the key 152.00 support zone and extended the drop into the 150.00
price region. The sellers are now in control and the natural target should be
the major trendline
around the 148.00 handle.
That’s where the buyers
will likely step in with a defined risk below the trendline to position for a
rally into new highs. The sellers, on the other hand, will want to see the
price breaking further lower to increase the bearish bets into the 146.00
handle next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have a minor downward trendline defining the current bearish momentum.
From a risk management perspective, the sellers will have a better risk to
reward setup around the 152.00 level and the trendline to position for further
downside. The buyers, on the other hand, will want to see the price breaking
those levels to start piling in for new highs.
USDJPY Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that the price has reached the lower bound of the average daily range for today, so we might see a bounce
from these levels.
Upcoming
Catalysts
Today we have the US ADP, the US Employment Cost Index and the FOMC Policy
Decision. Tomorrow, we get the latest US Jobless Claims figures and the US ISM
Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP
report.
