Fundamental
Overview
The USD continues to be backed
by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Yesterday, we
also got the US
Jobless Claims figures where the data showed that the labour market
continues to rebalance via less job availability rather than more layoffs.
Such data keeps the
interest rates expectations stable around two cuts by the end of the year and
supports the risk sentiment amid a pickup in growth without inflationary
pressures.
The JPY in this environment
should keep losing ground against the major currencies. 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 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
USDJPY 4 hour
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
USDJPY 1 hour
On the 1 hour chart, we can
see the average daily range for today defined by the white
lines. We get the US PCE report today and it might trigger a bearish US Dollar
reaction. The data won’t change anything for the Fed though, so the buyers will
likely take it as a fading opportunity to pile in for new highs.
Upcoming
Catalysts
Today we conclude the week with the US PCE report where the market expects
the Core PCE to fall further towards the Fed’s 2% target.