Fundamental
Overview
The USD continues to remain
under pressure against most major currencies despite higher Core PCE estimates
following the US CPI and PPI reports, and a better-than-expected Retail
Sales data yesterday.
The market pricing for the
Fed went from expecting more than 80 bps of easing by year-end at the peak of
the risk-off sentiment to roughly 60 bps as of now. That didn’t provide a
pullback in the US Dollar selloff though. The focus now switched to the FOMC
decision due tomorrow where the Fed is expected to keep rates steady.
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.
As the risk sentiment
improved and Treasury yields bounced, the JPY started to lose ground against
most currencies. Tomorrow, we have the BoJ policy decision where the central
bank is expected to keep everything unchanged.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY failed to sustain the break below the key 148.60 level and
eventually pulled all the way back to the trendline. This is where we can expect the
sellers to step in with a defined risk above the trendline to position for a
drop into the 140.00 handle. The buyers, on the other hand, will want to see
the price breaking higher to increase the bullish bets into the 160.00 handle
next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we now have an upward minor trendline defining the bullish momentum on
this timeframe. If we were to get a pullback into the trendline, we can expect
the buyers to lean on it to position for the break above the major trendline,
while the sellers will look for a break lower to increase the bearish bets into
the 140.00 handle next.
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 sellers will look for a rejection around
the trendline, while the buyers will target a break above it. The red lines
define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the rate decisions from the BoJ
and the Fed. On Thursday, we get the US Jobless Claims figures. On Friday, we
conclude the week with the Japanese CPI.
