Markets Analysis

Fundamental Analysis

• USDJPY rises to 145.58 JPY, closes at 2023 high level
• Amid declining trading volume, no atmosphere of foreign exchange intervention by the authorities, putting pressure on the JPY to weaken.
• Dollar buoyed by the expectation that the Japan-U.S. interest rate differential will continue for the time being, with the dollar index rising

USDJPY Technical Analysis

Analysis of the 4-hour chart of the USDJPY shows a strong rise to a new 2023 high. The main reason behind this rise can be attributed to the very strong buying power of the dollar and the awareness of the interest rate differential between the U.S. and Japan. Interest rate differentials usually encourage investment in higher-interest currencies, which in turn supports currency appreciation.

The Bollinger bands on the 4-hour chart show a transition between +1σ and +2σ, which forms a band walk that suggests a trend. Near-term resistance is at 145.90 JPY, and if this level is breached, the next target would be 147.30 JPY.

Considering the current developments and fundamentals, the uptrend is expected to continue.

Day Trading Strategy (Hourly)

Analyzing the hourly chart of the USDJPY, the +1σ of the Bollinger Band is acting as a support line.
The RSI value is gradually cutting back, and a temporary adjustment move may occur. Although we do not sense an atmosphere of currency intervention, verbal intervention is still a possibility.
Against this backdrop, a temporary decline to the low 145 JPY is expected.

However, from a fundamental standpoint, the JPY continues to depreciate against the dollar, so the directionality is likely to remain unchanged.

As a day trading strategy, we will adopt a push-buy policy. The entry price is set at 145.10 JPY and the profit target is 145.75 JPY. On the other hand, the stop loss is set at 144.75 JPY. The strategy is to take advantage of a short-term correction and aim for another rise.

Support and Resistance Lines

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

145.90 JPY – Major resistance level
145.10 JPY – Fibonacci level

Market Sentiment

USDJPY　Sell: 71% Buy: 29%

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