Fundamental Analysis

• U.S. stock indices hit all-time highs as risk appetite grows following a major U.S. rate cut.
• USDJPY briefly surged to just below 144 JPY, forming a wedge pattern.
• The Bank of England has decided to keep interest rates unchanged, and today the Bank of Japan (BoJ) will hold its monetary policy meeting.

USDJPY technical analysis

Analyzing the daily chart of USDJPY, we can see that the pair is forming a wedge pattern from a broader perspective. There are two types of wedges: continuation and reversal. It is still unclear which type this wedge belongs to. However, despite lower lows, a divergence is appearing where MACD is rising, indicating the possibility of a reversal wedge.

Today, the BoJ is holding its monetary policy meeting, with expectations for rates to remain unchanged. The recent yen appreciation seems to be losing momentum. However, if the BoJ Governor makes any hawkish comments, the yen could appreciate quickly. Among the world’s major central banks, Japan is the only one not currently in a rate hike cycle. Even a slightly hawkish tone could push the yen higher.

Today’s focus will be whether USDJPY can break above 143.75 JPY. If it does, there is a possibility of the pair rising to around 144.50 JPY. However, caution is advised as selling pressure is also expected to intensify.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of USDJPY, a double top has formed with 143.75 JPY as the high. The selling pressure is quite strong. However, with U.S. stocks hitting all-time highs, USD is likely to strengthen, making it hard to predict the direction. Fundamentally, a rate cut suggests USD selling, but the stock market tends to rise, adding to the complexity.

For now, it’s best to wait for the results of the BoJ’s monetary policy meeting and the subsequent press conference by the governor.

The day trading strategy is to wait and see. After the press conference, we will assess the market and follow the trend. If the wedge breaks, we anticipate a rise to around 144.50 JPY, which may provide opportunities for scalping or short-term trades.

Support/Resistance lines

The following are the support and resistance levels to watch:

• 143.75 JPY: The double top high on the 1-hour chart / 28-day moving average on the daily chart.

Market Sentiment

USDJPY: Sell: 34% / Buy: 66%

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.