Markets Analysis

Fundamental Analysis

• Major U.S. stock indexes rise, perhaps on hopes of halting U.S. interest rate hikes
• U.S. Unemployment Insurance Claims Beat Market Estimates, Signs of Labor Market Contraction
• U.S. FOMC meeting in June is expected to halt interest rate hikes; dollar tends to weaken
• Crude oil prices plunge, reports of a nuclear agreement between the U.S. and Iran (denied by the U.S. government)
• Japan GDP revised upward, from 1.6% to 2.7

USDJPY Technical Analysis

The dollar dropped from mid-139 JPY to around 139.00 JPY. This was due to the upward revision of Japan’s GDP, which strengthened the yen’s bid. U.S. Unemployment Insurance Claims released in the morning of New York time strengthened dollar selling and the dollar-yen dropped sharply. The yen appreciated all the way to the low JPY 138 level.

Day Trade Strategy (Hourly)

Market sentiment is approaching a sell/buy ratio, and yesterday’s sharp decline appears to have eliminated some of the sell positions. Since the price has broken below the triangle, we believe that short-term selling can be initiated to target the return high. Specifically, if the price approaches the lower line of the triangle near JPY 139.20, we may be able to sell the return high.

Also, since JPY 138.70 has been a major support line in the past, a short-term rebound could be targeted.

Triangle

Analysis of the hourly chart leg confirms that the price has fallen below the triangle that was being considered. The price has clearly broken below JPY 139.070, which had been a major resistance zone. The downward trend may strengthen for a while.

Since the USDJPY fluctuation is driven by the USD, further volatility is expected at the FOMC and BOJ policy meetings scheduled for next week.

Support and Resistance Lines

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

JPY 138.70 – Major support line in the past
JPY 138.45 – Support zone based on volatility analysis

Market Sentiment

USDJPY Sell: 55% Buy: 45%

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.