Fundamental Analysis

• The minutes of the U.S. FOMC revealed that several members supported a rate cut.
• The Dollar Index updated its lowest value, falling for the fourth consecutive day.
• USDJPY temporarily reached the 144JPY level, and U.S. stock indices are approaching record highs.

USDJPY technical analysis

Let’s analyze the daily chart of USDJPY. The 21-day moving average and the conversion line of the Ichimoku Kinko Hyo acted as resistance, forming a doji candlestick. The trigger was the release of the July FOMC minutes, where several members expressed support for a rate cut, making a September rate cut increasingly likely.

USDJPY formed a peak at the 21MA and then reversed. The Dollar Index continues to update its lowest values, leading to a weaker dollar. The focus now shifts to the previous low during the sharp decline at 141.70JPY. When plotting the Fibonacci expansion, the 61.8% level is at 136.90JPY, and the 100% level is at 129.31JPY. RSI is currently at 31, and attention is on whether it will fall below 30.

The future trend depends on when the Bank of Japan acts and how far the U.S. Federal Reserve cuts rates.

Day trading strategy (1 hour)

Let’s analyze the 1-hour chart of USDJPY. USDJPY seems to be declining, with the 90MA being perceived as a resistance line. The noteworthy point is the appearance of divergence on the RSI. The momentum of the decline is weakening, and it is expected that USDJPY might rebound to the 146JPY level. The direction is generally dollar selling, so USDJPY is expected to continue declining.

The day trading strategy is to sell at the rebound peak. If RSI reaches around 50 and USDJPY climbs to the mid-146JPY level, consider selling actively.

Sell at 146.0JPY and take profit around 141.70JPY. If USDJPY breaks above 146.50JPY, set a stop loss.

Support/Resistance lines

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

• 146.70JPY: Previous Low

Market Sentiment

USDJPY Sell: 65% Buy: 35%

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.