Fundamental
Overview
The USD has been marginally
stronger in the past couple of days as despite a softer US
CPI and US
PPI reports, the components that feed into the Core PCE increased the Fed’s
preferred price index. In fact, the Core PCE Y/Y is now projected at 2.7% vs.
2.6% prior, while the M/M measure is seen at 0.3% vs. 0.3% prior.
On the JPY side, the data
recently started to come out on the softer side and Governor Ueda recently
didn’t sound like someone who’s in a hurry to raise rates amid some
uncertainty. The Japanese Yen in the past couple of weeks has been supported
across the board more by the risk-off sentiment and falling Treasury yields
rather than domestic fundamentals.
Today we got the news that Japanese
firms agreed to lower than demanded wage
hikes. This didn’t change the market pricing of 31 bps of tightening by
year-end as traders await more data on the inflation front to increase the
expectations for another rate hike.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY daily
On the daily chart, we can
see that USDJPY failed to sustain the break above the key 148.60 level on the
first try but the buyers are now trying once again. From a risk management
perspective, the sellers will have a better risk to rewards setup around the trendline to position for a drop into the
140.00 handle next. The buyers, on the other hand, will want to see the price
breaking above the trendline to increase the bullish bets into new highs.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, there’s
not much we can glean from this timeframe but the buyers will likely continue
to pile in as long as the price stays above the 148.60 level targeting the trendline.
The sellers, on the other hand, will want to see the price falling back below
the key level to regain control and push the price into new lows.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, there’s
not much else we can add here as the buyers will continue to pile in above the
148.30 and 148.60 levels, while the sellers will look for a break lower to
position for a drop into the 140.00 handle next. 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.
