Fundamental Overview
Generally positive risk sentiment continues to weigh on the yen as the carry trade remains in cruise control mode. The market is also less afraid of intervention before the 160.00 mark because it has become quite clear that the Japanese cannot do anything to stop the depreciation of the yen without a change in fundamentals. Therefore, everything will depend on the US inflation numbers, where hot data will likely take us to 160.00 in the blink of an eye, while weak numbers could trigger a short-term correction.
USDJPY Technical Analysis – Daily Time Frame
USDJPY Daily
On the daily chart, we can see that USDJPY has continued to rebound since the decline caused by the failure of the US NFP report. Overall, the overall uptrend remains intact as global growth expectations and the high interest rate differential pose big hurdles for the yen. The trend will likely only reverse when we start seeing US recession data. Until then, the 160.00 level will remain the primary target, but if all other things remain equal, we can expect much higher prices to come.
USDJPY Technical Analysis – 1 Hour Time Frame
USDJPY 1 hour
On the hourly chart, we can see that the price recently broke above the first key level at 156.28. This opened the door for a move to the next swing level at 158.00. Much will depend on US inflation data, but a spike lower into the 155.00 support should see buyers soften the move and position themselves for a rally towards the 160.00 level. Sellers, on the other hand, will need to break through the 155.00 support to start targeting the 152.00 price region.
Upcoming catalysts
Today we have Chairman Powell’s speech on the US PPI and the Fed. Tomorrow we will receive the US CPI report and US retail sales data. On Thursday, the focus will be on the latest U.S. jobless claims numbers to see if last week’s numbers were the start of a trend or just a fluke.
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