Fundamental Overview
The USD is once again higher across the board as Trump followed through with his threats and imposed tariffs on Canada, Mexico and China on Saturday. We saw also other markets like the stock market opening with big gaps due to the negative macroeconomic implications of trade wars.
There’s still some hope in the markets that the tariffs will be lifted quickly as the countries involved will get to a deal. In fact, today the focus will be on Trump’s talks with Canada and Mexico expected in the first half of the US session.
On the JPY side, not much has happened since the last BoJ policy decision where the central bank hiked interest rates by 25 bps as widely expected but didn’t offer much in terms of forward guidance.
The latest Tokyo CPI came in line with forecasts although a touch higher than the prior reading. This week we have the Japanese wage growth data, but the yen continues to be driven more by the Treasury yields and the bouts of risk off sentiment.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY continues to consolidate around the major trendline with the price now trading back above it. The buyers will likely step in around these levels to position for a rally into the 160.00 handle. The sellers, on the other hand, will want to see the price falling back below the trendline to position for the drop into the 149.00 handle.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair has been basically ranging for several weeks between the 156.60 resistance and the 155.00 support although we got two failed downside break outs. As the price broke above the 155.00 level again, the buyers piled in for a rally into the resistance. The sellers will need the price to fall back below the support to regain conviction for new lows.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum. The buyers will likely continue to lean on the trendline to push into new highs, while the sellers will want to see the price breaking lower to start targeting new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US ISM Manufacturing PMI and Trump speaking with Canadian and Mexican officials on the tariffs. Tomorrow, we get the US Job Openings data. On Wednesday, we have the Japanese wage growth data, the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report.
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This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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