Fundamental Analysis

• US ADP Employment Report Shows Weak Results, Lowest Since January
• US ISM Non-Manufacturing Index Is Strong, Leading to USD Buying Recovery
• Bank of Canada Decides on a 0.25% Rate Cut

USDJPY technical analysis

Analyzing the daily chart of USDJPY, it has rebounded sharply to the 156 JPY level. Technically, this rebound occurred at the 52-day moving average. Although the rise was strong enough to surpass the previous day’s high temporarily, it was pushed back by selling pressure, resulting in a harami pattern. It couldn’t surpass the 28-day moving average, being squeezed between key moving averages.

The uptrend has already broken, and it’s unlikely to see a continuous rise towards the 157 JPY or 158 JPY levels from here. The risk of a decline is considered higher. Although the US ISM index showed a strong economy, the employment situation is deteriorating, and a US rate cut is approaching.

We should remain cautious about the risk of a decline in USDJPY.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of USDJPY, it is possibly forming a high. After rising to 156.48 JPY, it seems to be declining since the morning. The RSI has also fallen below 50, indicating a downward trend again. The 38.2% Fibonacci arc might be functioning as a resistance line.

Currently, it is moving within the cloud, trying to find direction, but it seems that the upward momentum is weak, and a downward trend is expected.

For day trading, consider selling in the early 156 JPY range, with the target for settlement around 155.35 JPY. The stop should be set at 156.50 JPY.

Support/Resistance lines

The following support and resistance lines should be considered:

• 156.48 JPY: Recent High
• 155.70 JPY: Monthly Pivot

Market Sentiment

USDJPY: Sell: 60% Buy: 40%

Featured Currency Pair of the Week (NZDCAD)

The Bank of Canada implemented a 0.25% rate cut as expected. The New Zealand Dollar to Canadian Dollar has risen for four consecutive days, currently trading around 0.8485 CAD. The Governor of the Bank of Canada commented that further rate cuts would depend on economic indicators, leading to strong selling of the Canadian Dollar. If it reaches the round number of 0.85 CAD, profit-taking sales are also expected. Pay attention to the breakout of 0.85 CAD.

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.