Fundamental Overview
The main theme in the last couple of weeks has been the selling of US assets. Stock, bonds and the US Dollar have been under strong selling pressure in what looks like a general deleveraging from US assets in favour of safe havens like gold, which has been printing new all-time highs almost every day.
On the JPY side, the currency has been driven mainly by global events rather than domestic fundamentals. The negative impact on the economy from tariffs uncertainty and the downward pressure on inflation from the surging yen and lower commodity prices, 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 finally reached the key 140.00 handle. This is where we can expect the buyers to step in with a defined risk below the level to position for a correction into the major trendline. The sellers, on the other hand, will want to see the price continuing lower to increase the bearish bets into the 137.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that once the 142.00 support gave way, the sellers piled in more aggressively and pushed the pair into the 140.00 handle. From a risk management perspective, the sellers will have a better risk to reward setup around the minor downward trendline to position for further downside. The buyers, on the other hand, will want to see the price breaking above the trendline to start targeting the next major trendline around the 147.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the pair briefly probed below the 140.00 handle but chasing the move lower at these levels looks bad from a risk to reward perspective. We can see that we have a minor downward trendline defining the momentum on this timeframe. The sellers will likely lean on the trendline to position for a drop below the 140.00 handle, while the buyers will look for a break higher to target a move into the 142.00 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the Japanese and US Flash PMIs. On Thursday, we get the latest US Jobless Claims figures, while on Friday, we conclude the week with the Tokyo CPI.
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This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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