Fundamental Analysis

• U.S. FOMC Minutes Show Hawkish Stance, Discussing Additional Rate Hikes This Year
• Chinese stocks sharply lower, defaults by major Chinese real estate companies
• Outflow of funds from China spurs buying of dollars as a safe-haven asset

USDJPY Technical Analysis

Analysis of the daily chart of the USDJPY shows that it has broken through the recent high of 145.90 JPY and has risen to the 146.40 JPY level. Currently, the daily chart shows an 8-day move, and there is no sign of currency intervention.

In terms of fundamentals, the discussion in the U.S. FOMC meeting minutes regarding the prospects for additional interest rate hikes before the end of the year can be considered a major factor. The hawkish stance expressed in the meeting has accelerated buying of the dollar. Furthermore, the deterioration of the Chinese economy may have increased the willingness to purchase the U.S. dollar as a safe-haven asset.

From a technical perspective, the next resistance line to watch is 147.30 JPY, which corresponds to 100% of the Fibonacci Expansion. Considering the current developments and fundamentals, the uptrend in the USD/JPY is likely to continue, but caution is needed for a reaction around 147.30 JPY.

Day Trading Strategy (Hourly)

Analysis of the hourly chart of the USDJPY shows that the pair continued to rise based on the rebound at the 24 moving averages, gradually moving away from the MAs. The break above the 146.40 JPY level clearly indicates the onset of an uptrend, even for a short period of time.

However, with the RSI located at around 70, we need to be wary of the possibility of an adjustment sell-off. In particular, the recent high for the RSI is 76.25, and if the RSI rises to around this value, the risk of a selloff increases.

As for day trading strategy, the policy is to buy on the push side. The entry price is set at 145.90 JPY and the settlement target is 147.30 JPY. Meanwhile, the stop loss is set at 145.50 JPY. The upward movement is clear and we would like to follow the trend.

Support and Resistance Lines

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

145.90 JPY -Major support line

Market Sentiment

USDJPY　Sell: 76% Buy: 24%

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