Markets Analysis

Fundamental Analysis

• USDJPY experiences heightened intervention concerns, temporarily falling to the 153 JPY level.
• The G7 issues a joint statement aiming to curb excessive currency fluctuations.
• Reports indicate Israel has decided on a method of retaliation against Iran, leading to a rise in gold prices.

USDJPY technical analysis

Analyzing the daily chart of USDJPY, the pair briefly dropped to the 153 JPY level following the G7’s joint statement but then saw buying at dips, currently moving around 154.45 JPY. The recent high was at 154.78 JPY. Analyzing the ADX indicates a very strong trend with a value of 41.

The G7’s joint statement included a phrase that “excessive FX volatility has adverse impacts,” which seems to practically accept the possibility of FX intervention by the Japanese government. It’s unclear where the intervention might occur, but if it surges past 155 JPY suddenly, a rapid drop could follow.

Market sentiment shows 80% holding short positions. Before the last FX intervention, the rate had quickly surpassed 150 JPY, triggering stop-loss orders before plummeting.

This time, should the surge be rapid and surpass the 155 JPY threshold, intervention is likely anticipated. Regardless of the scenario, caution is necessary.

Day trading strategy (1 hour)

Analyzing the 1-hour USDJPY chart, the pair is above the 24-day moving average, currently unstable within the Ichimoku cloud, with prevailing concerns about FX intervention. The fundamentals only underscore concerns about intervention, while other elements contribute to a weaker JPY and stronger USD.

The RSI rebounded at 50, marking an important signal for potential upward movement.

Short-term focus is on buying, especially if it breaks above 154.78 JPY. The timing of any intervention remains uncertain, thus a quick trading approach is advisable. If it surpasses 155 JPY, profit-taking should be considered just before 155 JPY.

Support/Resistance lines

Key support and resistance levels to consider are as follows:

Recent high at 154.78 JPY

Market Sentiment

USDJPY Sell: 80%, Buy: 20%

Featured Currency Pair of the Week (AUDJPY)

The Australian dollar has formed a range between 98.50 JPY and 100 JPY. Similar to yesterday, with the USD playing a dominant role in the FX market, it presents a challenging environment for cross yen pairs. A range strategy will be applied, selling near 100 JPY and buying near 98.50 JPY.

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