Fundamental
Overview
The USD continues to be backed
by good economic data as we have also seen recently from the US PMIs last Friday and the US
Consumer Confidence report yesterday. Such data keeps the interest rates
expectations stable around two cuts by the end of the year and supports the risk
sentiment amid a pickup in growth.
The JPY in this environment
should keep losing ground against the major currencies. 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 after a minor dip on Monday, rallied back to the intervention
level at the 160.00 handle. Remember, that an intervention is not guaranteed as
the Japanese are fighting against strong fundamentals and the market is much
bigger than them.
Nonetheless, we might see reactions
like we did on Monday as buyers could square their positions and the sellers
could pile in with a defined risk above the level. For now, the path of least
resistance remains to the upside.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that in case we get a pullback from the intervention level, the buyers will
likely step back in around the 158.00 support
where we can also find the 38.2% Fibonacci retracement level for confluence.
The sellers, on the other
hand, will want to see the price breaking below the 158.00 support to increase
the bearish bets into the major trendline around the 156.00 level.
USDJPY Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that we have another minor upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning against the trendline with a
defined risk below it to position for a break above the 160.00 resistance with
a better risk to reward setup.
The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into the 158.00 support. The red dotted lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the latest US Jobless Claims figures, while on Friday we
conclude the week with the Tokyo CPI and the US PCE.