Fundamental
Overview
The bullish momentum in the
USDJPY pair seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now
priced out the aggressive rate cuts expectations and it’s almost perfectly in
line with the Fed’s projections.
Therefore, we will likely
need more strong US data to see the market pricing in an earlier pause in the Fed’s
easing cycle and give the US Dollar a further boost.
In the bigger picture, it
looks like the US long term yields are bound to rise further, which should keep
the uptrend in the USDJPY pair intact, but more bullish catalysts for the
greenback would give more conviction for the buyers.
The next big risk events will
be in November when we get the October data and the US election.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY probed above the key swing level at 149.40 but failed to
sustain the breakout. The sellers will likely pile in around these levels to
position for a drop back into the 147.22 level, while the buyers will want to
see the price rising back above the swing level to position for a rally into
the 152.00 handle next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that the recent price action formed a rising
wedge right around the 150.00 handle. The sellers will want to see the
price breaking the pattern to the downside to increase the bearish bets into
the 147.22 level. The buyers, on the other hand, will likely lean on the bottom
trendline
to position for a rally into new highs.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see more clearly the price action inside the pattern. There’s not much else we
can add here as the sellers will look for a downside break, while the buyers
will want to see a bounce on the bottom trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front with just a couple of key economic
releases. On Thursday, we get the US Retail Sales and US Jobless Claims data,
while on Friday we conclude with the Japanese CPI.