Fundamental
Overview
The USD continues to remain
one of the weakest major currencies as the good news on the tariffs front and the
lower than expected US inflation figures of last week kept the positive risk sentiment
going. The market is still expecting roughly two rate cuts by year-end for the
Fed but overall, we are just in rangebound mode given the lack of meaningful
changes in conditions in the past few weeks.
On the JPY side, the Tokyo
CPI figures today came out lower than expected and didn’t help the JPY as a
rate hike by year-end got already priced in after the US-Japan trade deal. For
more appreciation we will likely need weak US data to increase the dovish bets
on the Fed or higher inflation figures for Japan to price in more rate hikes
than currently expected.
Watch also the political
shifts as news of more fiscal support will lead the market to expect stronger
economic activity and therefore higher chances of more rate hikes.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we
can see that USDJPY eventually fell back below the key 148.30
resistance and extended the drop into the
146.00 handle before bouncing back. The sellers will likely continue to step in
around the 148.28 resistance with a defined risk above it to position for a
drop into the 142.35 support. The buyers, on the other hand, will look for a
break higher to increase the bullish bets into the 151.20 resistance next.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we a minor resistance zone around the 147.00 handle that now turned
into support. The buyers will likely continue to pile in around these levels
with a defined risk below the support to keep targeting a break above the
148.28 resistance. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 142.35 support next.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart,
there’s not much else we can add here as the buyers will look for dip-buying
opportunities around the support, while the sellers will look for a downside
breakout to push into new lows. The red lines define the average daily range for today.
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This article was written by Giuseppe Dellamotta at investinglive.com.