Fundamental Overview
The USD got a boost from the positive Trump’s comments on China late Tuesday. We saw the bullish momentum holding yesterday but it started to wane as disappointing news started to filter through.
We see stronger reactions to positive news because of overstretched positioning, so that will likely continue to be the case even though in the medium term, the US Dollar should keep on depreciating as the path of least resistance for the Fed remains to cut rates.
On the JPY side, the currency has been driven mainly by global events rather than domestic fundamentals. Alongside the Swiss Franc, it’s been the favoured safe haven in the currencies space and will likely continue to do so.
The negative impact on the Japanese economy from tariffs uncertainty and the downward pressure on inflation from the surging yen will keep the BoJ on the sidelines for the time being.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY bounced from the key 140.00 handle and pulled all the way back to the 143.50 level. From a risk management perspective, the sellers will have a better risk to reward setup around the major trendline to position for further downside, while the buyers will look for a break higher to increase the bullish bets into the 151.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong resistance zone around the 144.00 handle where we can find the confluence of the previous swing levels and the minor trendline. The sellers will likely pile in around these levels with a defined risk above the trendline to position for a break below the 140.00 handle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline next.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the Tokyo CPI. As a reminder though, the market is focused on tariff related news at the moment, so the data is not as market-moving as it used to be in the past months. The US Jobless Claims could move the market though if we get a spike above the 260K level.
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This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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