Fundamental
Overview
The USD has had some mixed
performance since the tariffs announcement although overall it’s been
marginally stronger except against the safe havens like the Swiss Franc and the
Japanese Yen. There’s no real divergence in FX as the market continues to price
in more and more cuts for all the central banks.
At the moment, the market
is more driven by the risk-off sentiment amid the recessionary fears. Traders are
now fully pricing five rate cuts for the Fed by year-end with 60% chance of a
25 bps cut at the upcoming FOMC meeting despite Fed Chair Powell saying that
they are not in a hurry to cut rates.
On the JPY side, the
currency has been driven mainly by global events rather than domestic
fundamentals. The global stock market selloff and the growth fears made the
market to scale back rate hikes expectations with the BoJ now seen on hold for
the rest of the year.
The Japanese Yen continues
to remain supported amid the risk-off flows as the carry trades get unwound.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY is consolidating around the lows. The sellers will likely
continue to pile in around these levels with a defined risk above the 146.60
level to keep pushing into the 140.00 handle. The buyers, on the other hand,
will want to see the price rising back above the 146.60 level to start
targeting the 148.60 level next.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the recent price action with the fakeout above the 146.60
level last Friday that was quickly reversed as the pair gapped lower at the
open today. The market participants will look for a break on
either side to pile in with more conviction and extend the moves.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will look for a break above the
146.60 level, while the sellers will target a break below the 145.18 level.. Nevertheless,
we will get a couple of notable data releases
