Fundamental
Overview
Yesterday, around 1:00 PM
ET, WSJ’s Timiraos published an article which seemed like suggesting that a 50
bps cut is still being discussed. The market responded by raising 50 bps cut
probabilities to around 43% from 13% before the news.
Nick Timiraos is considered
a Fed “insider”, so the market is attentive to all of his pieces concerning
potential Fed decisions.
The probabilities for the
Fed to cut by 50 bps at the upcoming meeting stand now around 43% and a total
of 115 bps of easing by year-end. For the BoJ, the market sees a 100%
probability of no change at the upcoming meeting and a total of 8 bps of easing
by year-end.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY is now near the key 140.20 level. This is where we can expect
the buyers to step in with a defined risk below the level to position for a
rally into the 150.00 handle. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 137.00 handle
next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have a downward trendline defining the current bearish
momentum. If we get a pullback from the 140.20 level, the sellers will likely
lean on the trendline with a defined risk above it to position for a break
below the 140.20 support
with a better risk to reward setup. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the next major
trendline around the 145.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see more clearly the WSJ’s article acting as a catalyst for the drop into the
lows. There’s not much else we can glean from this timeframe as the buyers will
look to buy the dip around the 140.20 level and the sellers will target a break
below it. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment
report which is expected to print at 68.0 vs. 67.9 last month.