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
USDJPY Daily
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
USDJPY 4 hour
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
USDJPY 1 hour
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.
Watch the video below
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