Markets Analysis

Fundamental Analysis

• Finance Official Kanda comments that recent movements are speculative
• Mentions taking all necessary measures, spreading caution about potential currency intervention
• Despite narrowing Japan-US interest rate differentials, the backdrop of ongoing JPY depreciation

USDJPY Technical Analysis

Analyzing the daily chart of USDJPY using moving averages and ADX for technical analysis. Observing the 90-day and 28-day moving averages, there is a gentle but ascending trend.

The ADX (14) indicator has risen to 42, suggesting the emergence of a trend. However, both +DI and -DI are pointing downwards, indicating a strong trend without a clear direction, hence, it’s prudent to avoid rash entries.

Finance officials, including Minister Kanda, have been verbally indicating currency intervention, keeping USDJPY from rising above the 152JPY mark. With the seasonal factor of the fiscal year-end, it might be wise to wait and see.

Day Trading Strategy (1-Hour Chart)

The trading range for USDJPY has narrowed significantly. After last week’s major event, it has been moving within a range of 151.00JPY to 151.50JPY, with the range gradually narrowing. Typically, such narrowing precedes a significant breakout. When the range narrows, it’s thought to be accumulating energy, preparing for the breakout.

If it breaks out above the 152JPY level, it could trigger a rapid surge by hitting stop losses. However, if currency intervention occurs, it could lead to a several hundred pips drop. Being sensitive to movements towards JPY depreciation, careful entry consideration is advised.

If buying, it is crucial to set a stop loss to limit the position. “Resting is also a part of trading,” hence it might be good to wait and watch.

Support and Resistance Lines

Key support and resistance lines to consider are as follows:

151.95JPY – The past highest value in the 151JPY range

151.00JPY – A round number

Market Sentiment

USDJPY Sell: 74% Buy: 26%

Today’s important economic indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.