Fundamental
Overview
The generally
positive risk sentiment continues to weigh on the JPY as the carry trade
remains in cruise control. The market is also less fearful of an intervention
before the 160.00 handle as it’s been pretty clear that the Japanese can’t do
anything to stop the Yen depreciation without a change in the fundamentals. Therefore,
everything will hinge on the US inflation figures where hot data will likely take
us to 160.00 in the blink of an eye while soft readings might trigger a
short-term correction.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily
chart, we can see that USDJPY has been rallying non-stop since the dip provided
by the miss in the US NFP report. Overall, the big picture uptrend remains intact
as global growth expectations and the stark differential in interest rates are
big headwinds for the JPY. The trend will likely reverse only when we start to
see recessionary US data. Until then, the 160.00 handle will remain the first
target but if all else remains equal, we can expect much higher prices ahead.
USDJPY
Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour
chart, we can see that the price recently broke above the first key swing level
at 156.28. This has opened the door for a move into the next swing level at
158.00. A lot will depend on the US inflation data but a spike lower into the
155.00 support
should see the buyers fading the move and position for a rally into the 160.00
level. The sellers, on the other hand, will need to break below the 155.00
support to start targeting the 152.00 price region.
Upcoming
Catalysts
Today we have the US PPI and Fed Chair Powell speech. Tomorrow,
we get the US CPI report and the US Retail Sales data. On Thursday, the focus
will be on the latest US Jobless Claims figures to see whether the last week’s
numbers were the start of a trend or just a fluke.