Fundamental Overview
The USD got a boost last week from the strong US PMIs which lifted Treasury yields and put in question the rate cut in September. Once the market digested the report and saw that there was more good news on the growth side than bad news on inflation, the USD strength faded.
The USD held the gains against the JPY because the data was still supportive for the Fed’s higher for longer stance and the positive risk sentiment. Both the scenarios are negative for the Yen, so the trend will likely change only when we start to get some recessionary US data that will make the market to price in a more aggressive rate cut path and lead to some risk-off sentiment.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY continues to rise slowly into the intervention level at 160.00 as the lack of recessionary US data keeps the Yen on the backfoot. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline, but we will likely need some big miss in the US data to trigger such a correction.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been consolidating around the 157.00 handle as the general USD weakness put a lid on further gains. There’s a good support for the buyers around the minor trendline where we can also find the 38.2% Fibonacci retracement level for confluence. The sellers will want to see the price breaking below the trendline to extend the correction into the major trendline next.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the rangebound price action of the last few days. A break below the 156.51 level should see the sellers piling in to position for a drop into the minor trendline. On the other hand, a break above the 157.20 level will likely increase the bullish momentum with the buyers increasing the bets into the 158.00 handle.
Upcoming Catalysts
Today we get the US Consumer Confidence report where the focus will likely be on the labour market details and weak data should give the Yen a boost in the short-term. On Thursday, we will see the latest US Jobless Claims figures. Finally on Friday, we conclude the week with the Tokyo CPI and the US PCE reports.
