Fundamental
Overview
The US Dollar this week has
been erasing some of the losses experienced last week after the benign US PPI
and the Trump’s reciprocal tariffs announcement. There hasn’t been any notable
catalyst this week to support the greenback although some analysts pointed to
less dovish comments from Fed’s Waller on Tuesday which would explain the rise
in Treasury yields that followed afterwards.
Yesterday, during the Asian
session we got some positive headlines on the tariffs side as Trump said that a
new trade deal with China was possible. That weakened the US Dollar which
continued to depreciate throughout the European and US sessions.
On the JPY side, we got the
Japanese
CPI report today which saw another uptick in Core inflation, which is what
the BoJ is focused on. The Tokyo CPI released a couple of weeks before the
National CPI is generally the one that moves the market as it leads the Japanese
CPI figures. The market continues to fully price in the next rate hike in September
with a total of 35 bps of tightening expected by year-end.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY broke below the 150.93 low and extended the drop below the
150.00 handle before pulling back a bit. The price is now coming back to retest
the 150.93 level. This is where we can expect the sellers to step in with a
defined risk above the level to position for the drop into the 148.60 level
next. The buyers, on the other hand, will look for a break higher to extend the
pullback into the major trendline.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have a minor downward trendline defining the current bearish
momentum. The sellers will likely lean on the trendline with a defined risk
above it to keep pushing into new lows. The buyers, on the other hand, will
look for a break higher to pile in for a rally into the major trendline next.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, there’s
not much we can add here as the sellers will look for a rejection from the
trendline, while the buyers will look for a break higher to extend the pullback
into the next major trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US
Flash PMIs.
