Fundamental
Overview
The USD started the week on
the backfoot as the new month begins. The last week’s strength might have been
influenced more by quarter-end flows rather than something fundamental as the
economic data didn’t change interest rates expectations. Nonetheless, the data
continues to support the risk sentiment amid a pickup in growth without
inflationary pressures.
Even if the US Dollar weakens against the other major currencies, the JPY in this environment
should keep losing ground and the Japanese officials
can’t do much to reverse the trend unless the fundamentals change. We will
likely need weak US growth data to see some sustained Yen strength, although it
might be short lived if it’s not enough to make the market to price in more
aggressive rate cuts for the Fed.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY eventually managed to break above the key 160.00 handle and
extended the rally as the lack of intervention gave the market a bit more
confidence to target new highs.
If we get a pullback into
the 160.00 level, we can expect the buyers to step back in with a defined risk
below the level to target new highs. The sellers, on the other hand, will want
to see the price falling back below the 160.00 handle to gain some conviction
and start targeting the major trendline around the 157.00 handle.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor trendline defining the current upward momentum. We can
expect the buyers to lean on the trendline to keep pushing into new highs,
while the sellers will need to see the price breaking below the trendline and
the 160.00 level to start targeting new lows.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor resistance zone around the 161.25 level as the price
continues to consolidate just beneath it. The buyers will want to see the price
breaking higher to increase the bullish bets into the 165.00 level next, while
the sellers will keep on looking for a break below the trendline to target a
pullback into the 160.00 handle. The white lines define the average daily range for today.
Upcoming
Catalysts
This week is full of important events. We begin today with the release of the US
ISM Manufacturing PMI. Tomorrow, we have the US Job Openings and Fed Chair
Powell speaking. On Wednesday, we get the US ADP, the US Jobless Claims, the US
ISM Services PMI and the FOMC Meeting Minutes. Thursday is going to be a US
Holiday for Independence Day. Finally, on Friday, we conclude the week with the
US NFP report.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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