Markets Analysis

Fundamental Analysis

• USD/JPY continues to show strength, and unless the interest rate gap between Japan and the US is bridged, the yen might weaken.
• Focus on the US Consumer Price Index (CPI). With rising crude oil prices, is inflation accelerating?
• Crude oil prices are hovering around 88 dollars, facing the most significant supply shortage in a decade.

USDJPY Technical Analysis

Analyzing the daily chart of the USD/JPY exchange rate, the 24-day moving average and the conversion line of the Ichimoku Cloud are being considered. Currently, there’s a strong desire to buy USD/JPY on dips, with each decline being met by buying interest. Unless the interest rate difference between Japan and the US is resolved, a shift from a weak yen trend seems unlikely.

Looking forward, the outcome of the US CPI is a point of interest. If the result exceeds market expectations, there’s a chance for a significant move in the direction of a weaker yen. Additionally, concerns are raised about accelerated inflation due to surging crude oil prices, with speculations that inflation rates might surpass market expectations.

Day Trading Strategy (Hourly)

Analyzing the 1-hour chart of the USD/JPY exchange rate, a downward trend line can currently be drawn, and whether this trend line is broken upwards is the focal point. While the conversion line on the 1-hour chart has already been breached, there’s the base line, cloud, and the 240-day moving average below, which could potentially serve as robust support.

Given this, it’s advised to be cautious about entering until support lines are confirmed or until the trend line is breached, especially with the US CPI announcement looming today. Large volatility might arise depending on its outcome. The recommended strategy would be to wait and see for now and consider entering after confirming the US CPI results.

Support and Resistance Lines

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

147.25 JPY – Primary resistance line
146.86 JPY – Upper limit of the Ichimoku Cloud

Market Sentiment

USDJPY　Sell: 70% Buy: 30%

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.