Fundamental
Overview
The USD has been overall
rangebound in the last couple of weeks. The last week’s strength might have
been influenced more by quarter-end flows rather than something fundamental as
the economic data didn’t change interest rates expectations. All else being
equal, the data should continue to support the risk sentiment amid a pickup in
growth without inflationary pressures.
Even if the US Dollar
weakens against the other major currencies, the JPY in this environment should
keep losing ground and the Japanese officials can’t do much to reverse the
trend unless the fundamentals change. We will likely need weak US growth data
to see some sustained Yen strength, although it might be short lived if it’s
not enough to make the market to price in more aggressive rate cuts for the
Fed.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY continues to rally as the break of the
key 160.00 handle and the lack of intervention gave the buyers more confidence
to target new highs.
If we get a pullback into
the 160.00 level, we can expect the buyers to step back in with a defined risk
below the level to target new highs. The sellers, on the other hand, will want
to see the price falling back below the 160.00 handle to gain more conviction
and start targeting the major trendline around the 157.00 handle.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have a minor trendline defining the current upward momentum. The
buyers continue to lean on the trendline to keep pushing into new highs, while
the sellers will need to see the price breaking below the trendline to position
for a pullback into the 160.00 handle.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see a very clean uptrend with the price bouncing on the trendline before making
new highs. All else being equal, we should keep seeing the same but if the
price were to break below the trendline, the sellers will likely take some
near-term control and provide a pullback into the 160.00 handle. The white
lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US ADP, the US Jobless Claims, the US ISM Services PMI and
the FOMC Meeting Minutes. Tomorrow is going to be a US Holiday for Independence
Day. Finally, on Friday, we conclude the week with the US NFP report.
