Market Report for HUBFX: USD/JPY Breaks Higher Through Key Moving Averages

September 17, 2024

The USD/JPY pair surged above the critical 100-hour moving average (MA) today, marking a notable shift in market sentiment as the US dollar strengthened against the Japanese yen. This move was driven by better-than-expected US economic data, including robust retail sales and industrial production figures, which provided a fresh boost for dollar bulls.

Earlier in the week, USD/JPY hovered around multi-month lows, dipping as far as 139.59 on Monday, a level last seen in July 2024. Despite the bearish sentiment, the pair managed to recover and rebound, reclaiming crucial support above the 140.25 level (the December 2023 low). This was a pivotal point for market participants, offering some stability ahead of today’s bullish breakout.

As the US session unfolded, stronger-than-expected economic releases further fueled the rally. USD/JPY decisively breached the 100-hour MA, solidifying a near-term bullish bias. This level will now serve as immediate support. A break below it would dampen the positive momentum and potentially signal a return to the downside.

Looking ahead, the next key technical hurdle lies at the 200-hour MA around 142.02. This area coincides with a swing resistance zone between 141.69 and 141.94, where further upward momentum could be tested. A sustained move above this range could propel USD/JPY toward the 38.2% retracement level of the recent downtrend from the September highs, located at 142.48.

While market sentiment is cautiously optimistic, traders will closely watch the upcoming FOMC meeting tomorrow, which could introduce volatility. A hawkish tone from the Federal Reserve, signaling further rate hikes, may push USD/JPY higher, while any dovish surprises could reverse today’s gains.

Key Levels to Watch:

• Support: 100-hour MA (~141.20)
• Resistance: 200-hour MA (142.02) and swing area (141.69-141.94)
• Upside Target: 38.2% retracement at 142.48

In summary, today’s price action reinforces a positive bias for USD/JPY, with potential for further gains as long as the pair holds above the 100-hour MA. However, caution remains ahead of tomorrow’s FOMC decision, where a shift in interest rate expectations could spark significant market moves.

HUBFX clients should monitor these developments closely, as the yen’s movement in the FX market could create both opportunities and risks, particularly in the lead-up to key economic announcements.

USDJPY Breaks Higher

• Event: The USDJPY has broken above the 100-hour moving average, signaling a bullish bias.
• Context: Stronger US retail sales, industrial production, and capacity utilization data helped push the currency pair higher after bouncing from lows.
• Key Levels: Traders now eye the 200-hour moving average near 142.02, with resistance in a swing area between 141.69 and 141.942.

Stock Market on a Streak Before FOMC Meeting

• Event: The S&P 500 is nearing a new all-time high, on a seven-day winning streak ahead of the Federal Reserve’s meeting.
• Context: The streak creates risks, as the Fed’s rate decision could trigger volatility. Whether they raise rates by 25 or 50 bps, market reactions could vary.

New Zealand GDT Price Index

• Event: New Zealand’s Global Dairy Trade price index rose by 0.8%, with whole milk powder up 1.5%.

USDCHF Rises on Strong US Data

• Event: The USDCHF bounced off session lows after better-than-expected US economic data, including retail sales.
• Context: Market focus is on the Federal Reserve’s decision on whether to raise rates by 25 or 50 bps.

Fed’s Rate Decision Dilemma

• Event: The Federal Reserve faces a “finely balanced” decision on whether to raise rates by 25 or 50 bps.
• Context: A 50-bps increase could manage risks better, but a 25-bps rise might avoid re-igniting inflation.

EURUSD, USDJPY, and GBPUSD Technical Outlook

• Event: Technical levels for EURUSD, USDJPY, and GBPUSD ahead of key US retail sales data.
• Context: USDJPY is higher but needs to stay above its 100-hour moving average, while EURUSD and GBPUSD face similar resistance levels.

Canada Housing Starts

• Event: Canada’s housing starts fell to 217.4K in August, down from July’s revised 279.8K.
• Context: This marks a slowdown in Canada’s housing market, with investor interest in real estate waning.

US Retail Sales and the Fed Decision

• Event: Markets await US retail sales data, which may influence the Fed’s rate decision.
• Context: Better-than-expected data could increase the chances of a 50-bps rate hike, while weaker data may solidify calls for a 25-bps rise.