Fundamental
Overview
The USD weakened across the
board last Friday following the soft US NFP report. The data showed some more labour
market cooling with an increase in the unemployment rate and a decrease in wage
growth. We basically have an economy that is slowing but still growing. The
market seems to be taking it as good news as it still expects a soft landing.
Even if the US Dollar
weakens against the other major currencies, the JPY in this environment should
keep losing ground and the Japanese officials can’t do much to reverse the
trend unless the fundamentals change. We will likely need weak US growth data
to see some sustained Yen strength, although it might be short lived if it’s
not enough to make the market to price in more aggressive rate cuts for the Fed.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY last week pulled back towards the key 160.00 handle after some
soft US data, but eventually erased all the losses this week. The buyers will want
to see the price breaking above the cycle high to increase the bullish bets
into the 165.00 level.
The sellers, on the other
hand, will need the price to fall below the 160.00 handle to turn the bias more
bearish and position for a drop into the major trendline
around the 158.00 level.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price broke above the downward minor trendline this week that was
defining the bearish momentum into the 160.00 handle. The buyers piled in on
the breakout and extended the rally into the 161.80 level. There’s not much to
do here for the sellers other than waiting for a change in momentum to start
positioning for new lows.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we now have a minor upward trendline defining the current bullish
momentum. The buyers will keep on leaning on it to target new higher highs,
while the sellers will want to see a break below it to position for a drop into
the 160.00 handle next. The white lines define the average daily range for today.
Upcoming
Catalysts
Today is the most important day of the week as we get the US CPI and the US
Jobless Claims figures. Tomorrow, we conclude the week with the US PPI and the
University of Michigan Consumer Sentiment survey.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
