Markets Analysis

Fundamental Analysis

• U.S. FOMC decides to raise rates by 0.25%, neutral stance on rate hike at next meeting
• China tightens restrictions on imports of Japanese seafood, reacting to release of treated water from nuclear power plants
• USD/JPY focus is on Friday’s BOJ policy meeting, with a slight JPY buy
• No policy change is the majority view at the BOJ meeting, with a large rally possible if no policy change is made

USDJPY Technical Analysis

After the U.S. FOMC meeting announcement, the pair sold off from mid-140 JPY to the 139 JPY level. However, with the US-Japan interest rate gap widening further and no policy change expected at the BOJ meeting, there is a strong appetite for push-backs. Strong push-buying was seen in the first half of 140 JPY, and the pair recovered to the mid-140 JPY again.

Technical analysis shows that the pair is forming a descending channel, and the direction is probably to sell. However, we do not want to rush into selling. We should either hold sell positions based on the image of short-term rotation, or buy at the push point from a medium- to long-term perspective. Since it is difficult to make a decision at this point, we need to pay attention to the relationship between the channel and the price and the position of the moving average line.

Day Trading Strategy (Hourly)

The day trade policy is to sell on the upside. The market has shifted from an ascending channel to a range and is in the process of forming a descending channel. The 24 moving averages are pointing downward, so we can conclude that selling forces are strong in the short term. Since there is a large support band in the first half of 140 JPY, we would like to imagine a cycle of selling back near the upper limit of the channel and buying back at the lower limit, while being aware of short-term rotation.

If the pair moves above the channel, the direction will change and we will take a buy policy.

Support and Resistance Lines

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

140.85 JPY – Major resistance line

Market Sentiment

USDJPY　Sell: 52% Buy: 48%

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.