Fundamental Analysis

• Despite intervention comments by Finance Minister Kanda, the market remains defiant against yen depreciation.
• USDJPY rises to 160.80 Yen, updating the lowest level in 33 years.
• Selling positions increase, with 70% of the positions being USDJPY shorts.

USDJPY technical analysis

Analyzing the daily chart of USDJPY, it is above the 100% Fibonacci expansion, hovering around 160.55 Yen. Intervention comments from Finance Minister Kanda, which have become routine, have heightened expectations for currency intervention, resulting in over 70% short positions. It is highly likely that short yen positions were targeted with stop-loss strategies.

Going forward, the key level is the round number of 161 Yen. Ultimately, I predict 164 Yen, corresponding to 161.8%. It is uncertain if the yen will rapidly depreciate to 164 Yen, but with no factors driving yen appreciation, a gradual increase seems likely.

With further potential yen depreciation, caution is advised.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of USDJPY, it rose to 160.87 Yen. It temporarily dropped to around 160 Yen following comments by Finance Minister Kanda but picked up to hit new highs. This resulted in continued yen depreciation. Currency intervention requires coordination with the US, and having already intervened twice this year, a third intervention seems unlikely.

Even if intervention occurs, it will not be near previous levels. Considering past interventions at around 151.90 Yen in 2022 and 160.18 Yen in 2023, the next intervention level might be around 170 Yen. At the very least, there should be a gap between interventions.

For day trading, I continue to recommend aggressively buying the dips. Entry at 160.30 Yen, take profit just below 161 Yen, and stop loss at 159.90 Yen.

Support/Resistance lines

The following support and resistance lines should be considered moving forward:

161 Yen … Round number

160.87 Yen … Recent high

Market Sentiment

USDJPY Sell: 78% Buy: 22%

Featured Currency Pair of the Week (GBPCHF)

The GBPCHF has declined. It rose to around 1.137 Francs but formed a return high and declined, forming an engulfing candlestick. The return high is forming, and the bearish engulfing candle is a sell signal. Currently, the 52-day moving average is descending, with the 240-day moving average acting as support.

Going forward, it could fall to 1.255 Francs. This weekend, the French general election and next month’s early French run-off and British general election are scheduled. Euro and Pound may react sensitively, and the Swiss Franc could be bought as a safe-haven asset. It’s worth noting.

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