Fundamental Analysis

• The Bank of Japan Governor maintains a long-term stance on interest rate hikes.
• The Fed Chair comments that it is time for rate cuts, clarifying a dovish policy stance.
• Hezbollah launches a full-scale attack on Israel, further complicating the Middle East situation.

USDJPY technical analysis

Analyzing the daily chart of USDJPY, it is observed that USDJPY has broken below the conversion line and formed a bearish engulfing pattern, indicating a decline. The divergence in monetary policy directions between the Bank of Japan and the Fed has created an environment favoring JPY appreciation. The immediate downside target is expected to be 141.70 JPY. However, drawing the Fibonacci Expansion reveals that 61.8% stands in the 136 JPY range and 100% in the 129 JPY range, which suggests a significant possibility of further JPY appreciation.

The RSI stands at 31, but just as it remained high during the JPY depreciation trend, it is highly likely to remain low during the JPY appreciation trend. Given the fast pace of the downward trend, traders should exercise caution.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of USDJPY, USDJPY has entered the 143 JPY range. The JPY appreciation trend has become clear, solidified by Fed Chair Powell’s remarks. The JPY appreciation is likely to continue, and the downward trend is expected to persist. Given the frequent occurrence of timeframes where the RSI is below 30, a rebound is expected at some point, but it is preferable to engage in selling on rallies.

The day trading strategy is to sell on rallies. Sell at 144.50 JPY, take profit at 141.70 JPY, and set a stop at 145 JPY.

Support/Resistance lines

The following are the support and resistance levels to consider in the future:

• 141.70 JPY: Recent Low

Market Sentiment

USDJPY Sell: 90% Buy: 10%

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.