Fundamental Analysis

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• Several Federal Reserve Bank Presidents Support U.S. Rate Cuts, Dismiss Need for Emergency Cuts
• U.S. Stock Indices Continue 8-Day Rally, Optimism Dominates Markets

USDJPY technical analysis

USDJPY dropped to the 145.10 JPY level. With the Dollar Index falling, USDJPY and other dollar-based currency pairs moved in favor of a weaker USD. Several Federal Reserve Bank Presidents support rate cuts, and attention is focused on whether Fed Chair Powell will pave the way for rate cuts at this weekend’s Jackson Hole meeting.

U.S. stock indices have continued an 8-day rally, spreading optimism. However, caution is advised as weak numbers from August’s employment report or unemployment claims could trigger a rapid sell-off.

Technically speaking, the recent high of 149.38 JPY and the recent low of 145.18 JPY are key levels. This is a critical moment to determine whether there will be a rebound or if the selling pressure will continue. MACD signals suggest a potential bottoming out.

Day trading strategy (1 hour)

USDJPY continued its decline from the 149 JPY level, dropping to 145.10 JPY. It rebounded slightly from the -3σ line, rising to 146.68 JPY, but the recovery is weak. With the Federal Reserve Presidents supporting rate cuts, the dollar weakened, putting selling pressure on USDJPY. Although the Japanese yen isn’t being strongly bought, the relative ease of its decline is evident.

Currently, the MACD histogram is above the MACD line, but new selling opportunities may arise if selling pressure increases again. This market is somewhat challenging.

The focus should be on short-term trades. The basic strategy is to sell on a rebound around the 147.80 JPY level and aim to exit around 146.50 JPY. The stop-loss should be set at 148.12 JPY.

Support/Resistance lines

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

149.50 JPY – Recent High
145.10 JPY – Recent Low

Market Sentiment

USDJPY – Sell: 44%, Buy: 56%

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.