Fundamental Analysis

• The US dollar is extremely strong, and the Japanese yen is the weakest currency. USDJPY is down 11% year-to-date.
• Expectations for foreign exchange intervention are increasing, and the number of long positions on the Japanese yen is rising.
• Be cautious of short squeezes; intervention is unlikely at current levels compared to past interventions.

USDJPY technical analysis

Analyze the daily chart of USDJPY. USDJPY is rising towards the recent high of 160.18 JPY. Data shows that short positions on USDJPY are gradually increasing, and positions expecting intervention are also on the rise. The immediate target appears to be the key level of 160.18 JPY.

Considering intervention realistically, it is likely to occur if USDJPY rapidly reaches the 164-165 JPY range. It seems unlikely to hit 164 JPY this week, but if it does, caution will increase significantly.

If USDJPY breaks above 160.18 JPY, attention should be paid to the monthly resistance line near 161.83 JPY.

Day trading strategy (1 hour)

Analyze the 1-hour chart of USDJPY. USDJPY continues to update its highs and is hovering around 159.89 JPY. It has not yet reached 160 JPY, but it’s only a matter of time. Fundamentally, the interest rate differential between Japan and the US is at play.

If USDJPY breaks above the recent high of 160.18 JPY, there are psychological resistance levels at 160.70 JPY and 161.83 JPY, so be wary of pullback movements. However, it is essential to recognize that intervention does not occur immediately and consider it a normal pullback.

The day trading policy is to short at 160.70 JPY. The stop should be set at 161.08 JPY and the target for profit-taking at 159.75 JPY.

Support/Resistance lines

The support and resistance lines to consider moving forward are as follows:

• 160.18 JPY: Recent high / intervention price

Market Sentiment

USDJPY Sell: 67%, Buy: 33%

Featured Currency Pair of the Week (GBPCHF)

Analyze the British pound to Swiss franc (GBPCHF). Currently, it is trading at 1.13 CHF and slightly rebounded at 1.12 CHF. Regarding Switzerland, they implemented an additional rate cut last week. Once the event is over, the forex market will focus on the next event: the UK elections. Reports indicate tough conditions for the ruling party, leading to the pound being sold off.

However, looking at the ADX, the downtrend is not particularly strong. Attention should be paid to whether the 28-day MA and the 90-day MA will form a death cross in the future.

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