Fundamental Overview
The USD has been marginally weaker recently due to lower than expected US inflation figures last week that sent Treasury yields lower and made the market to price in higher chances of a second rate cut by the end of the year.
Yesterday, the greenback weakened across the board following a
WSJ report saying that Trump would lay out the trade vision but won’t impose tariffs yet. Tonight though, he spoke to the media and said that
he intends to impose 25% tariffs on Canada and Mexico next week. Following the news, the US Dollar erased almost all the losses from the prior day.
On the JPY side, nothing has changed as the market still expects a 25 bps rate hike at this week’s meeting following last week’s BoJ Ueda’s comments. The yen has been stronger against the other major currencies though due to the risk off caused by the tariffs comments.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY broke out of the recent consolidation and it’s now approaching the major trendline. From a risk management perspective, the buyers will have a better risk to reward setup around the major
trendline to position for a rally into the 160.00 handle. The sellers, on the other hand, will look for a break below the trendline to extend the drop into the 149.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have now a downward trendline defining the current bearish momentum on this timeframe. The sellers will likely lean on the trendline to position for a drop into the major trendline. The buyers, on the other hand, will want to see the price breaking higher to start targeting the 160.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the sellers will look for a rejection from the trendline, while the buyers will look for a break above it. The red lines define the
average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with just a couple of key releases scheduled for the latter part of the week. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the Japanese CPI, the BoJ Rate Decision and the Flash PMIs.
Watch the video below
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
