Fundamental
Overview
After the strong push lower
from last Friday when Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium, the
USDJPY pair hasn’t moved much as the lack of catalysts this week kept the price
action at bay.
The market is waiting for
the key economic releases next week, and especially the NFP report, as that
will likely decide whether the Fed is going to deliver a standard 25 bps cut or
go for a more aggressive 50 bps cut in September.
Right now, it looks like
the Fed is going to cut rates into a resilient economy, so one has to be
mindful that we might eventually get an increase in economic activity that
could lift long term yields.
That might not be the
market’s focus at the moment because we will need a catalyst to change the
narrative, but it’s something to keep an eye on. The focus right now is on the
US labour market data as more weakening could not only trigger a more
aggressive Fed easing but also bring back recessionary fears which should
support the yen.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that after the rejection of the broken trendline around the 149.00 handle and the
drop into the 143.50 level, USDJPY hasn’t moved much as the market awaits the
key economic releases next week. There’s not much we can glean from this
timeframe so we need to zoom in to see some more details.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that the price recently broke above the major downward trendline which
could be a signal of a change in momentum. The buyers are starting to pile in
to position for a rally into the 150.00 handle and a break above the last lower
high at 146.50 should increase the bullish momentum. The sellers, on the other
hand, will want to see the price breaking the recent lows around the 143.50
level to increase the bearish bets into the 140.00 handle.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum
on this timeframe. The buyers will likely keep on leaning on it to position for
new highs, while the sellers will want to see the price breaking lower to
increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PCE report.