USD:
The US dollar weakened across the board on Tuesday after a couple of
headlines pointed to an imminent US-Iran deal. The weakness started when Qatari
mediators reported that the language for a possible US-Iran agreement had been
drafted.
The momentum then gathered pace when US Treasury Secretary Bessent
confirmed that an Iran deal could have come as soon as yesterday and would have
included the reopening of the Strait of Hormuz.
The US dollar losses started to get trimmed late yesterday probably because
the anticipated timeline for the deal passed without
an announcement. Nevertheless, the hopes for a deal will likely keep the
greenback on the backfoot for now unless we get another escalation.
The next major event will be the US CPI report next week. The data will be
critical for the September FOMC decision and the Jackson Hole Symposium.
A hot report will likely trigger a rally in the US dollar, with traders increasing
rate hike bets. A soft report, on the other hand, should reduce further the
risk of Fed tightening and put more pressure on the greenback
JPY:
On the JPY side, not much
has changed after last week’s massive intervention. The only notable
development was US
Treasury Secretary Bessent’s remarks to CNBC potentially hinting to a
faster BoJ tightening pace.
In fact, he stated that
“it will require policy to follow up on the intervention” and added
that the “US would not have joined if it was not optimistic about Japan
policies”. Japan’s currency diplomat Mimura stated that he had a shared understanding
with the BoJ following the intervention, which might be another hint to faster
rate hikes.
Overall, without a change
in the fundamentals, the interventions will continue to be just clearing events
to rebuild positions at better levels. The trend is unlikely to change without
a dovish repricing in Fed interest rate expectations or a faster BoJ tightening
pace.
USDJPY TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that USDJPYis slowly recovering ground
after the intervention and position squaring took the pair near the 155.00
handle. There’s not much we can glean from this timeframe as the nearest key
resistance stands around the 160.50 level. If the price gets there, we can
expect the sellers to step in with a defined risk above the resistance to
position for a drop back into the 155.00 handle. The buyers, on the other hand,
will look for a break to increase the bullish bets into new highs.
USDJPY TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we
have a minor resistance zone around the 158.50 level where the price got
rejected from several times. That’s where we can expect the sellers to step in
with a defined risk above the resistance to position for a drop back into the
155.00 level. The buyers, on the other hand, will look for a break to increase
the bullish bets into the 160.50 resistance.
USDJPY TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor support zone around the 157.20 level. If we get a pullback, we can
expect the buyers to step in around the support with a defined risk below it to
keep pushing into new highs, while the sellers will look for a break to pile in
for a drop into the 155.00 handle. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the latest
US Jobless Claims figures. Tomorrow, we conclude the week with the US NFP
report.
This article was written by Giuseppe Dellamotta at investinglive.com.
