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Fundamental
Overview
The USD last week finished slightly
positive but overall, it was a pretty flat week. We got some great US
PMIs on Friday which showed growth without inflationary pressures. In fact,
despite the strong PMIs the market pricing for interest rates remained
unchanged. That should be positive for risk sentiment for the time being.
The JPY, on the other hand,
continues to lose ground against the major currencies amid the general pickup
in global growth and overall positive risk sentiment, even if we get bouts of
risk-off here and there. 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
USDJPY Daily
On the daily chart, we can
see that USDJPY has finally reached the intervention level at the 160.00 handle.
Remember, that another intervention is not guaranteed as the Japanese are
fighting against strong fundamentals and the market is much bigger and stronger
than them.
Nonetheless, we might see a
reaction as buyers could square their positions and the sellers could pile in
with a defined risk above the level. For now, the path of least resistance remains
to the upside.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that after breaking the key 158.00 resistance, the price started to rally more
aggressively towards the 160.00 handle. In case we get a pullback from the
intervention level, the buyers will likely step back in around the 158.00 resistance
now turned support where we can also find the 38.2% Fibonacci
retracement level for confluence.
The sellers, on the other
hand, will want to see the price breaking below the 158.00 support to increase
the bearish bets into the trendline
around the 156.00 level.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum.
If we get a pullback, the buyers will likely lean on the trendline with a
defined risk below it to position for a break above the 160.00 resistance with
a better risk to reward setup.
The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into the 158.00 support. The red dotted lines define the average daily range for today.
Upcoming
Catalysts
This week is a bit light on the data front although we will still get to see some
important releases. We begin tomorrow with the US Consumer Confidence where the
market will be focused on the labour market details. On Thursday, we get the
latest US Jobless Claims figures, while on Friday we conclude the week with the
Tokyo CPI and the US PCE.