FundamentalOverview

The USD got a boost fromthe positive Trump’s comments on China late Tuesday. We saw the bullishmomentum holding yesterday but it started to wane as disappointing news startedto filter through.

We see stronger reactionsto positive news because of overstretched positioning, so that will likelycontinue to be the case even though in the medium term, the US Dollar should keepon depreciating as the path of least resistance for the Fed remains to cutrates.

On the JPY side, thecurrency has been driven mainly by global events rather than domesticfundamentals. Alongside the Swiss Franc, it’s been the favoured safe haven inthe currencies space and will likely continue to do so.

The negative impact onthe Japanese economy from tariffs uncertainty and the downward pressure oninflation from the surging yen will keep the BoJ on the sidelines for the timebeing.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY bounced from the key 140.00 handle and pulled all the way backto the 143.50 level. From a risk management perspective, the sellers will havea better risk to reward setup around the major trendline to position for furtherdownside, while the buyers will look for a break higher to increase the bullishbets into the 151.00 handle next.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have a strong resistancezone around the 144.00 handle where we can find the confluenceof the previous swing levels and the minor trendline. The sellers will likelypile in around these levels with a defined risk above the trendline to positionfor a break below the 140.00 handle. The buyers, on the other hand, will wantto see the price breaking higher to increase the bullish bets into the majortrendline next.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a minor upward trendline defining the bullish momentum on thistimeframe. The buyers will likely lean on the trendline to keep pushing intonew highs, while the sellers will look for a break lower to increase thebearish bets into new lows. The red lines define the average daily range for today.

UpcomingCatalysts

Today we get the latest US Jobless Claimsfigures, while tomorrow we conclude the week with the Tokyo CPI. As a reminderthough, the market is focused on tariff related news at the moment, so the datais not as market-moving as it used to be in the past months. The US Jobless Claimscould move the market though if we get a spike above the 260K level.

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