USDJPY rally momentum slows; US employment data to determine future direction?【September 1, 2023】

Fundamental Analysis

• Focus on U.S. employment data; if weakness in the U.S. labor market becomes clearer, the dollar may sell off
• Stagflation fears in the Eurozone, rising prices and economic recession at the same time
• USDJPY tilts higher, hovering in the mid-145’s as the Yen strengthens across the board

USDJPY Technical Analysis

Analysis of the daily chart of the USD/JPY market shows that the downward trend continues after the appearance of a high shadow line. The momentum to chase higher prices is weakening, and a deep adjustment is possible. The U.S. employment data will be the key to determine the future direction.

The labor market has been noticeably weak, and a weak employment report would likely tilt the dollar weaker and the JPY stronger. Conversely, if the jobs report is unexpectedly strong, it is likely to raise expectations of a rate hike and push the JPY higher. Since market participants are paying close attention to the employment report, a major move is expected depending on its outcome.

Day Trading Strategy (Hourly)

Analyzing the hourly chart of the USDJPY market, the rebalancing at the end of August strengthened the yen’s buying power, causing it to fall sharply in the New York hours. In today’s Tokyo session, there is a possibility of push-back buying in reaction to the rebound. However, we expect a wait-and-see attitude from London hours before the U.S. employment data. The base line of the equilibrium chart and the short-term moving average are short-term upside targets. The direction is likely to be determined after the U.S. employment data.

Our policy is to buy at the deep end during Tokyo hours and wait and see until the employment data in London hours and beyond. Today’s trading will be scalable and short term, so entry policy will be postponed.

Support and Resistance Lines

The resistance line to be considered in the future is as follows

145.60 JPY – Major daily resistance line
145.00 JPY – Round number

Market Sentiment

USDJPY　Sell: 65% Buy: 35%

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.