Fundamental Analysis

• The Bank of Japan (BOJ) decided on an additional rate hike and announced a reduction in large-scale government bond purchases.
• Fed Chair Powell made dovish remarks, suggesting a possible rate cut as early as September.

USDJPY technical analysis

Analyzing the daily chart of USDJPY, the currency pair plunged following the BOJ’s decision to raise rates. In a press conference, the BOJ Governor reiterated hawkish comments, indicating a continued move towards rate hikes. Meanwhile, Fed Chair Powell hinted at a potential rate cut in September.

USDJPY fell below the 240-day moving average, reaching 149.75 JPY. This marks the first drop below the 240-day moving average since January 4, effectively reversing the gains made from March to early July in just about 20 days.

The RSI is at 27.8, indicating slightly oversold conditions. The MACD shows a deepening trough, suggesting a bearish trend. With the RSI at 27.8, caution is needed for potential rebounds. There is a possibility of a rebound up to around 152 JPY. Given the high volatility, any adjustment could result in significant movement.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of USDJPY, 149.75 JPY seems to be a support level. With the daily RSI in the oversold zone, profit-taking is likely. With the U.S. employment data scheduled for tomorrow, position adjustments are expected to intensify.

It’s challenging to sell in the 149 JPY range. The day trading strategy suggests selling at 151.90 JPY, with a stop at 152.15 JPY, and targeting 150.50 JPY for the settlement.

Support/Resistance lines

The following support and resistance levels should be considered going forward:

• 148.50 JPY: Monthly support line

Market Sentiment

USDJPY: Sell: 42% Buy: 58%

Featured Currency Pair of the Week (EURAUD)

The EURAUD formed a doji with a long upper shadow. It briefly exceeded 1.67 USD but fell back near the opening price under selling pressure. The conversion line of the daily Ichimoku cloud is acting as support, but there is a possibility of breaking it today. The 1.67 USD range is strong resistance. The MACD signal line is close to crossing below the histogram. Attention should be paid to whether there will be another upward move.

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.