FundamentalOverview

Yesterday, the yenstrengthened across the board in the Asian session without any clear catalyst. Itlooks like it was more of a technical move as the price broke through a keytrendline rather than something fundamental.

On the other side, theremight be some pre-positioning into a dovish Powell speech on Friday as he willlikely pre-commit to a rate cut in September. In the big picture though, ratecuts into resilient growth should boost economic activity and keep long termyields high.

Moreover, the risk-onsentiment should also weigh on the yen as the carry trades would still be abetter option. So, although the picture is a bit murkier with Federal Reserverate cuts and potential BoJ rate hikes, it’s hard to see the yen appreciating inthe long term without a more pronounced slowdown in the US economy.

Nonetheless, the trend fornow remains skewed to the downside, so we will need some “confirmation” from thetechnical side to start looking for more upside or discard the idea.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY rejected the broken trendline around the 149.00 handle where wehad also the 38.2% Fibonacciretracement level for confluence.That’s where the sellers stepped in to position for a drop into the 140.00handle. The buyers will want to see the price breaking above the 149.00 handleto gain more conviction and position for a rally into new highs.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the price probed a little above the downward trendline last week, buteventually got smacked back down and fell even more as the price broke belowthe counter-trendline around the 147.60 level.

The price has now pulledback to the downward trendline, and this is where we can expect the sellers tostep in with a defined risk above the trendline to position for a drop into the140.00 handle. The buyers, on the other hand, will want to see the price breakinghigher to gain even more control and position for a break above the 149.00handle.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that the price returned inside the previous range between the 146.00 supportand the 148.00 resistance. The resistance zone is right around the downwardtrendline, so the sellers will have a nice barrier where to protect their stops.

We have also a minorcounter-trendline around the support, so a break below it should see the bearishmomentum increasing as the sellers will pile in more aggressively. The buyers,on the other hand, will need the price to break above the 148.00 resistance tostart targeting new highs. The red lines define the average daily range for today.

UpcomingCatalysts

On Thursday we get the US Jobless Claims figures and the US PMIs.On Friday we conclude with the Japanese CPI and Fed Chair Powell speaking atthe Jackson Hole Symposium.

See the video below