Fundamental Analysis

• US stock indices saw a rebound, and the Dollar Index also reached a record high.
• USDJPY shifted towards JPY strength following comments from the Bank of Japan (BOJ) governor hinting at a possible rate hike in December.

USDJPY Technical Analysis

Analyzing the daily chart for USDJPY, we observe an interesting divergence. While US stock indices rebounded and the Dollar Index rose (indicating USD strength), USDJPY fell from the 155 JPY range to the 153 JPY range. This indicates a stronger JPY trend overshadowing USD strength.

One key factor contributing to this shift is the BOJ governor’s comments hinting at a potential rate hike in December. The governor emphasized that rate hikes remain dependent on data, but Japan’s recovering consumer spending and two consecutive months of rising inflation support this view.

On the chart, two bearish engulfing candlesticks appeared at the high price range, signaling heavy resistance and potential reversal. If the rate hike expectations intensify, USDJPY could drop further, potentially testing the 200-day moving average around the 152.50 JPY level.

Day trading strategy (1 hour)

Analyzing the 1-hour chart for USDJPY, the pair continues to decline and is currently trading in the lower 154 JPY range. The recent low was at 153.90 JPY, and breaking this level could lead to a test of the November 19 low at 153.27 JPY. The market remains sensitive to the possibility of a BOJ rate hike in December, reinforcing the strength of JPY over USD.

Trading Approach

• Sell Strategy: Aim for short positions around 154.50 JPY.
• Take Profit: Target 153.50 JPY.
• Stop Loss: Above 155 JPY.

Support/Resistance lines

Key support and resistance lines to consider:

• 154.50 JPY: Pivot point.

Market Sentiment

USDJPY Sell: 62% Buy: 38%

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.