CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

USDJPY Analysis: Preparing for September Policies

Article By: ,  Market Analyst
August 30, 2024 11:04 AM

Key Events Today:

  • Tokyo Core CPI Rises to 2.4%: Marking the fourth consecutive increase
  • European Flash CPI Estimate: Matches the expected inflation drop to 2.2%
  • US Core PCE: Waited for insights into the upcoming September monetary policies

Next Week:

  • US Bank Holiday (Monday): Irregular volatility is expected
  • US ISM Manufacturing PMI (Tuesday): A leading economic indicator
  • US JOLTS Job Openings (Wednesday): A key indicator of overall employment
  • ADP Non-Farm Employment Change (Thursday): Provides an early look at employment trends
  • ISM Services PMI (Thursday): A leading indicator, challenging current inflation rate trends
  • US Non-Farm Payrolls (Friday): A critical indicator of economic activity
  • FOMC Member Williams' Statement (Friday)

The long-anticipated Fed rate cut for 2024 is near, with upcoming employment indicators set to play a crucial role in determining its magnitude, alongside today’s US Core PCE data. From the Yen’s perspective, Tokyo’s Core CPI surpassing the central bank’s target could set a hawkish tone for the BOJ at its September policy meeting. With both Dovish US and Hawkish Japanese policies in focus, the USDJPY may face increased bearish pressures.

Next week’s US data is expected to bring high volatility to the US Dollar, with leading economic indicators and non-farm payrolls data culminating in key remarks from Fed member Williams.

Technical Outlook

USDJPY Analysis: USDJPY – Weekly Time Frame – Log Scale

Source: Tradingview

On a weekly time frame, the chart continues to respect the support established by the Dragonfly Doji pattern, which aligns with the Relative Strength Index (RSI) retesting levels from January 2023. The key support levels remain near the extremes of the pattern, between 141.70 and 140, before potentially targeting the July 2023 low at the 137 zone.

On the upside, the trendline connecting consecutive higher lows from January, March, and December 2023 serves as the resistance and a critical barrier between the chart’s downtrend and any potential continuation of an uptrend.

A bullish trend could emerge if the price closes above the 150-barrier, with expected levels at 152 and 154. Given the trajectory of upcoming monetary policies from the Fed and BOJ, bearish dominance currently appears on the chart. However, this could shift if upcoming data supports a bullish reversal, confirming the presence of the Dragonfly Doji pattern.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024