Fundamental
Overview
The USD regained some strength
in latter part of last week. From the monetary policy perspective, nothing has
changed as the market continues to expect at least two rate cuts by the end of
the year and sees some chances of a back-to-back cut in November.
The data continues to
suggest that the US economy remains resilient with inflation slowly falling
back to target. Overall, this should continue to support the soft-landing
narrative and be positive for risk sentiment.
The JPY in this environment
should keep losing ground against the major currencies and the Japanese
officials can’t do much to reverse the trend unless the fundamentals change. The
Yen will likely need weak US growth data to see some sustained strength on
recessionary fears and more aggressive rate cuts expectations. But as long as
we have stable global growth and generally positive risk sentiment, the JPY
should remain in a downtrend.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY broke through the key trendline around the 158.00 level recently, rallied
back to retest it and eventually continued the move lower. For now, the sellers
remain in control and will look for an extension to the 152.00 handle. The
buyers, on the other hand, will need the price to rise back above the 158.00
handle to regain some control and start targeting new highs.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a strong resistance zone around the 158.00 handle. The
buyers will want to see the price breaking above it to gain confidence on
further upside, while the sellers will likely keep on defending the level and
position for a drop into the 152.00 level.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have an interesting zone between the 156.50 and 157.00 levels where
the price got rejected from several times in the past days. This might act as
kind of barometer for the sentiment with the price staying above the zone being
more bullish and below being more bearish. The white lines define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front. We begin on Wednesday with the release
of the Japanese and US Flash PMIs. On Thursday, we will get the latest US Jobless
Claims figures. Finally, on Friday we conclude the week with the Tokyo CPI and
the US PCE reports.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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