Fundamental Analysis

• The Governor of the Bank of Japan commented in a press conference that there is sufficient time for policy decisions.
• This weekend’s Lower House elections will be critical, with focus on whether the ruling party will secure a majority.
• If the ruling party fails to secure a majority, JPY could weaken further.

USDJPY technical analysis

Analyzing the daily chart of USDJPY, the focus is on whether the 200-day moving average will act as support. The pair touched the upper band (+2σ) of the Bollinger Bands and then pulled back. One of the factors influencing USDJPY is the Lower House elections to be held this weekend.

The ruling party has enjoyed a stable majority for over 10 years, but there are concerns this time about whether they will maintain that majority. The election outcome remains uncertain. If the ruling party loses its majority, it could become difficult for the Bank of Japan to implement additional rate hikes. This would likely accelerate JPY depreciation, making the election highly anticipated.

In the event of a loss of majority, a scenario where JPY weakens to the 159-160 range should be considered. Care should be taken when holding positions over the weekend.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of USDJPY, the market is focused on the Fibonacci retracement levels of the recent rally. Currently, the 38.2% level is acting as support, but due to the sharp rise in the pair, there is also a possibility of a drop to the 50% level around 151.13 JPY.

However, with the 200-day moving average at 151.40 JPY, buying the dip remains strong. It seems likely that the battle between selling pressure and dip-buying will continue for a while. The movement will likely follow U.S. interest rate trends.

As for the day trading strategy, buying the dip is recommended. Entry points are set at 151.40 JPY and 151.13 JPY. Exit points are set at 153 JPY, with a stop at 150.60 JPY.

Support/Resistance lines

The following are key support and resistance lines to consider:

• 151.40 JPY – 200-Day Moving Average
• 151.130 JPY – Fibonacci 50%

Market Sentiment

USDJPY Sell: 67% Buy: 33%

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*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.