Fundamental
Overview
The USD has been marginally weaker recently due to lower than expected
US inflation figures last week that sent Treasury yields lower and made the market
to price in higher chances of a second rate cut by the end of the year.
Yesterday, the greenback weakened across the board following a WSJ report saying that Trump would lay out the trade vision but won’t impose
tariffs yet. Tonight though, he spoke to the media and said that he intends to impose 25% tariffs on Canada and Mexico next week. Following
the news, the US Dollar erased almost all the losses from the prior day.
On the JPY side, nothing
has changed as the market still expects a 25 bps rate hike at this week’s
meeting following last week’s BoJ Ueda’s comments. The yen has been stronger
against the other major currencies though due to the risk off caused by the
tariffs comments.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY broke out of the recent consolidation and it’s now approaching
the major trendline. From a risk management perspective, the buyers will have a
better risk to reward setup around the major trendline to position for a rally into the
160.00 handle. The sellers, on the other hand, will look for a break below the
trendline to extend the drop into the 149.00 handle next.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have now a downward trendline defining the current bearish momentum
on this timeframe. The sellers will likely lean on the trendline to position
for a drop into the major trendline. The buyers, on the other hand, will want
to see the price breaking higher to start targeting the 160.00 handle.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the sellers will look for a rejection from the
trendline, while the buyers will look for a break above it. The red lines
define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front with just a couple
of key releases scheduled for the latter part of the week. On Thursday, we get
the latest US Jobless Claims figures, while on Friday we conclude the week with the
Japanese CPI, the BoJ Rate Decision and the Flash PMIs.
Watch the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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