FundamentalOverview
The BoJ eventually decidedto hike rates by 15 bps bringing the policy rate to 0.25%. This move wasexpected given that the day earlier we got lots of leaks. Governor Ueda in thepress conference didn’t say too much but it looks like the weak Yen was the mainreason for the rate hike as the economic data hasn’t been supporting such amove.
After some consolidation,the USDJPY pair broke through the key 152.00 handle and extended the losses intothe 150.00 price region. There’s been a good argument that most of the moveswe’ve been seeing in the past couple of weeks were driven by deleveraging fromstrengthening Yen.
Basically, the squeeze onthe carry trades impacted all the other markets. Given the magnitude of therecent appreciation in the Yen and the correlation with many other markets, itlooks like this could have been the reason indeed.
It will be interesting tosee how things evolve in the next days and if this correlation fades. Today, wewill also have the FOMC rate decision where the Fed is expected to keep ratessteady and signal a rate cut in September.
USDJPYTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that USDJPY cracked through the key 152.00 support zone and extended the drop into the 150.00price region. The sellers are now in control and the natural target should bethe major trendlinearound the 148.00 handle.
That’s where the buyerswill likely step in with a defined risk below the trendline to position for arally into new highs. The sellers, on the other hand, will want to see theprice breaking further lower to increase the bearish bets into the 146.00handle next.
USDJPY TechnicalAnalysis – 4 hour Timeframe
On the 1 hour chart, we cansee that the price has reached the lower bound of the average daily range for today, so we might see a bouncefrom these levels.
UpcomingCatalysts
Today we have the US ADP, the US Employment Cost Index and the FOMC PolicyDecision. Tomorrow, we get the latest US Jobless Claims figures and the US ISMManufacturing PMI. Finally, on Friday, we conclude the week with the US NFPreport.
