Markets Analysis

Dollar-Yen Rises, US Inflation Data Exceeds Expectations But Rate Hike Caution Suggested【October 12, 2023】

October 12, 2023

Markets Analysis

Fundamental Analysis

  • US Producer Price Index exceeds expectations, but impact is limited.
  • US FOMC minutes suggest a cautious stance on rate hikes, expectation of rate hikes diminishes with maintenance of high interest rates.
  • Dollar-Yen rises, the dollar strengthens relatively as rate hike expectations wane.

USDJPY Technical Analysis

Analyzing the daily chart of the Dollar-Yen exchange rate. Currently, it’s above the 10-day moving average. However, it’s unclear whether it will aim for 150 JPY again or if the range-bound market will continue.

In the US, there is a growing view that we have reached the peak of rate hikes, and there are expectations of a shift from interest rate maintenance to a rate cut direction. If this rate cut speculation becomes a reality, it could potentially act as a factor for a stronger yen.

Therefore, while aggressive buying should be avoided, we can expect a rise up to the upper limit of the range in the short term.

[USDJPY / D1]

Day Trading Strategy (Hourly)

Analyzing the 1-hour chart of the Dollar-Yen exchange rate. Currently, the range-bound market continues, with trading mainly between 148.25 JPY and 149.50 JPY. The RSI is at 55, and while the uptrend continues, there isn’t yet momentum to exceed 150 JPY. With the background of declining US rate hike speculations, there might be a strengthening in buying yen. Considering this situation, it is appropriate to consider selling near the upper limit of the range.

Today’s specific trading strategy is to enter at 149.45 JPY, settle at 148.85 JPY, and stop at 149.75 JPY.

Support and Resistance Lines

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

149.45 JPY – Upper limit of the range
148.25 JPY – Lower limit of the range

[USDJPY/ H1]

Market Sentiment

USDJPY Sell: 74% Buy: 26%

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
UK Gross Domestic Product15:00
US Consumer Price Index21:30

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

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