Fundamental Overview
The Yen lost some more ground last Thursday as the US Jobless Claims figures came out better than expected. That helped ease the fears around the US labour market triggered by the weak NFP report and improved the risk sentiment.
The market has been slowly paring back the aggressive rate cuts expectations for the Fed as now a 25 bps cut in September is seen as more likely with a total of 98 bps of easing by year-end. On the BoJ side, the market isn’t pricing any more rate hikes for this year as there are just 9 bps of tightening expected by year-end.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY bounced around the 142.00 handle and pulled back to the 148.00 handle near the broken trendline. The price is consolidating just beneath the 148.00 handle as the market awaits some more data before pushing with more conviction into either direction.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers will have a better risk to reward setup around the 150.00 handle where they will find the confluence of the major trendline and the 61.8% Fibonacci retracement level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the consolidation between the 146.00 support and the 148.00 resistance. The buyers will want to see the price breaking higher to pile in for a rally into the 150.00 handle, while the sellers will look for a break lower to position for a drop into the 140.00 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the US PPI data. On Wednesday, we have the US CPI report. On Thursday, we get the US Retail Sales and Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
