Fundamental Analysis

• U.S. ADP employment statistics have significantly deteriorated, exposing the weakness of the U.S. labor market.
• Expectations for an additional U.S. rate hike recede, U.S. stock prices rise.
• Crude oil prices plummet due to concerns of decreased demand from a deteriorating U.S. economy.

USDJPY Technical Analysis

Analyzing the 4-hour chart of the USD/JPY. It was supported at the 149 JPY range but has broken through the baseline of the Ichimoku cloud and is confirmed to be breaking below the cloud. The Japanese authorities maintain a “no comment” stance, but movements suggesting currency intervention are seemingly triggering a downward trend.

The 4-hour ascending trend line has broken out, and there’s a possibility it might aim for the 240-moving average hovering around the early 147 JPY range. Due to the significant deterioration of U.S. employment figures, which had been robust, there’s a potential shift from buying USD, which will need to be considered in future outlooks.

Day Trading Strategy (Hourly)

Analyzing the 1-hour chart of the USD/JPY. The Ichimoku baseline had been acting as a support line, but it broke through the 148.72 JPY support line this morning and is on a downward trend. The U.S. employment figures this week will be a determinant, but if the U.S. employment environment worsens, the possibility of an additional rate hike will decrease, and the interest rate differential between Japan and the U.S. won’t widen further.

The downward trend seems likely to continue for at least a while. There’s a possibility it might form a “W” shape. Calculating the target price from the W shape, it’s expected around 147.87 JPY. The RSI is at 34, and caution is needed if it drops below 30.

The day trading strategy is to sell. Entry is around 148.50 JPY, stop at 149.30 JPY, and settlement at 147.87 JPY.

Support and Resistance Lines

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

147.82 JPY – A major support line

Market Sentiment

USDJPY　Sell: 71% Buy: 29%

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.