Fundamental Overview
Yesterday, around 1:00 PM ET, WSJ’s Timiraos published an article which seemed like suggesting that a 50 bps cut is still being discussed. The market responded by raising 50 bps cut probabilities to around 43% from 13% before the news.
Nick Timiraos is considered a Fed “insider”, so the market is attentive to all of his pieces concerning potential Fed decisions.
The probabilities for the Fed to cut by 50 bps at the upcoming meeting stand now around 43% and a total of 115 bps of easing by year-end. For the BoJ, the market sees a 100% probability of no change at the upcoming meeting and a total of 8 bps of easing by year-end.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY is now near the key 140.20 level. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into the 150.00 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 137.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downward trendline defining the current bearish momentum. If we get a pullback from the 140.20 level, the sellers will likely lean on the trendline with a defined risk above it to position for a break below the 140.20 support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the next major trendline around the 145.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the WSJ’s article acting as a catalyst for the drop into the lows. There’s not much else we can glean from this timeframe as the buyers will look to buy the dip around the 140.20 level and the sellers will target a break below it. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment report which is expected to print at 68.0 vs. 67.9 last month.
