Published on May 4, 2023

Daily Analysis For USD/JPY 04-05-2023

USD/JPY Analysis

Economic Events and Scenario for USD/JPY

Economic Events: -

GMT	Event	Impact	Currency
01:00	(Japan) Greenery Day	None	JPY
01:00	(Latvia) Declaration of Independence Day	None	EUR
01:01	(Ireland) AIB Services PMI	Low	EUR
02:30	(Australia) Exports MoM	Low	AUD
02:30	(Australia) Imports MoM	Low	AUD
02:30	(Australia) Balance of Trade	High	AUD
02:45	(China) Caixin Manufacturing PMI	High	CNY
06:00	(Estonia) Industrial Production MoM	Low	EUR
06:00	(Estonia) Industrial Production YoY	Low	EUR
07:00	(Germany) Balance of Trade	High	EUR
07:00	(Germany) Exports MoM	Medium	EUR
07:00	(Germany) Imports MoM	Low	EUR
08:00	(Spain) Unemployment Change	High	EUR
08:00	(Spain) Tourist Arrivals YoY	Low	EUR
08:15	(Spain) S&P Global Services PMI	High	EUR
08:15	(Spain) S&P Global Composite PMI	Low	EUR
08:45	(Italy) S&P Global Services PMI	High	EUR
08:45	(Italy) S&P Global Composite PMI	Low	EUR
08:50	(France) S&P Global Services PMI	Medium	EUR
08:50	(France) S&P Global Composite PMI	Low	EUR
08:55	(Germany) S&P Global Services PMI	High	EUR
08:55	(Germany) S&P Global Composite PMI	Low	EUR
09:00	(Euro Area) S&P Global Composite PMI	Low	EUR
09:00	(Euro Area) S&P Global Services PMI	High	EUR
09:00	(United Kingdom) New Car Sales YoY	Low	GBP
09:30	(United Kingdom) S&P Global/CIPS UK Services PMI	High	GBP
09:30	(United Kingdom) Net Lending to Individuals MoM	Low	GBP
09:30	(United Kingdom) Mortgage Approvals	Medium	GBP
09:30	(United Kingdom) Mortgage Lending	Medium	GBP
09:30	(United Kingdom) BoE Consumer Credit	Medium	GBP
09:30	(United Kingdom) S&P Global/CIPS Composite PMI	Low	GBP
09:40	(Spain) Index-Linked Obligacion Auction	Low	EUR
09:40	(Spain) Obligacion Auction	Low	EUR
09:40	(Spain) Bonos Auction	Low	EUR
09:40	(Spain) 3-Year Bonos Auction	Low	EUR
10:00	(France) New Car Registrations YoY	Low	EUR
10:00	(Cyprus) Inflation Rate YoY	Low	EUR
10:00	(Cyprus) Inflation Rate MoM	Low	EUR
10:00	(Euro Area) PPI MoM	Low	EUR
10:00	(Euro Area) PPI YoY	Low	EUR
10:00	(France) 10-Year OAT Auction	Low	EUR
11:00	(Ireland) Unemployment Rate	Low	EUR
12:30	(Germany) New Car Registrations YoY	Low	EUR
12:30	(United States) Challenger Job Cuts	Low	USD
13:15	(Euro Area) Marginal Lending Rate	Low	EUR
13:15	(Euro Area) Deposit Facility Rate	High	EUR
13:15	(Euro Area) ECB Interest Rate Decision	High	EUR
13:30	(Canada) Imports	Low	CAD
13:30	(Canada) Exports	Low	CAD
13:30	(Canada) Balance of Trade	High	CAD
13:30	(United States) Unit Labour Costs QoQ	Medium	USD
13:30	(United States) Nonfarm Productivity QoQ	Medium	USD
13:30	(United States) Jobless Claims 4-week Average	High	USD
13:30	(United States) Continuing Jobless Claims	High	USD
13:30	(United States) Initial Jobless Claims	High	USD
13:30	(United States) Balance of Trade	High	USD
13:30	(United States) Exports	Medium	USD
13:30	(United States) Imports	Medium	USD
13:45	(Euro Area) ECB Press Conference	High	EUR
15:00	(Canada) Ivey PMI s.a	High	CAD
15:30	(United States) EIA Natural Gas Stocks Change	Low	USD
15:30	(United States) NY Fed Treasury Purchases TIPS 1 to 7.5 yrs	Low	USD
16:30	(United States) 8-Week Bill Auction	Low	USD
16:30	(United States) 4-Week Bill Auction	Low	USD

Today's Scenario: - Following a widely anticipated 25 basis point rate hike, the USD/JPY pair experienced a significant sell-off, dropping to around 134.40 during the Asian session. However, the pair has now found an intermediate cushion after the abrupt decline. This selling pressure was triggered by the Federal Reserve's neutral interest rate guidance, which contributed to the negative sentiment towards the asset.

Investors were particularly concerned about the Fed's guidance, as it suggested that future rate hikes may be less aggressive than previously expected. This caused many traders to reduce their positions in the USD/JPY pair, as they began to perceive the asset as less attractive compared to other options.

Despite this setback, the USD/JPY pair remains an important currency pair for many investors, and its performance is closely watched by analysts and traders around the world. As the global economic outlook continues to evolve, it is likely that we will see continued volatility in this asset.

Buy Scenario: - Buyers of the USD/JPY pair will need to overcome the immediate multi-day resistance zone around 135.15-25 to gain short-term bullish momentum.

Even if they succeed in doing so, there are still multiple obstacles ahead, including resistance near 136.70, the round figure of 137.00, and the 138.00 threshold, before they can take control of the currency pair. Till we did not advise to buy in USD/JPY.

Sell Scenario: - The USD/JPY pair is currently trading near the weekly low around 134.50 early on Thursday. This marks the third consecutive day of decline for the currency pair, as it tests the 21-day Exponential Moving Average (EMA) and an upward-sloping support line from March 24, located around 134.40-50.

It is important to note that the USD/JPY pair has failed to close above 138.00 on a daily basis, which, when combined with the recent pullback that broke the previous support zone around 135.25-15, gives hope to bearish traders.

The looming bear cross on the Moving Average Convergence Divergence (MACD) indicator also adds to the downside bias.

However, the 21-day EMA and a five-week-old ascending support line are currently providing support near the 134.50-40 confluence area.

If the USD/JPY pair breaks below this support level, the convergence of the 50-day EMA and 200-day EMA around 133.85 will be a key area to watch for the bears. Till we did not advise to sell the position in USD/JPY.

Support and Resistance Level: -