Published on May 5, 2023

Daily Analysis For USD/JPY 05-05-2023

USD/JPY Analysis

Economic Events and Scenario for USD/JPY

Economic Events: -

GMT	Event	Impact	Currency
01:00	(Japan) International Children's Day	None	JPY
01:00	(Netherlands) Liberation Day	None	EUR
02:30	(Australia) Home Loans MoM	Medium	AUD
02:30	(Australia) Investment Lending for Homes	Medium	AUD
02:30	(Australia) RBA Statement on Monetary Policy	Medium	AUD
02:45	(China) Caixin Composite PMI	Low	CNY
02:45	(China) Caixin Services PMI	High	CNY
06:45	(Switzerland) Unemployment Rate	High	CHF
07:00	(Germany) Factory Orders MoM	Medium	EUR
07:30	(Switzerland) Inflation Rate MoM	Low	CHF
07:30	(Switzerland) Inflation Rate YoY	Medium	CHF
07:30	(Switzerland) CPI	High	CHF
07:45	(France) Industrial Production MoM	Medium	EUR
07:45	(France) Private Non Farm Payrolls QoQ	Low	EUR
08:00	(Austria) Wholesale Prices YoY	Low	EUR
08:00	(Austria) Wholesale Prices MoM	Low	EUR
08:00	(Austria) Balance of Trade	Low	EUR
08:00	(Slovakia) Retail Sales YoY	Low	EUR
08:00	(Slovakia) Retail Sales MoM	Low	EUR
08:00	(Spain) Industrial Production YoY	Low	EUR
08:00	(Switzerland) Foreign Exchange Reserves	Low	CHF
08:30	(Euro Area) S&P Global Construction PMI	Low	EUR
08:30	(France) S&P Global Construction PMI	Low	EUR
08:30	(Germany) S&P Global Construction PMI	Medium	EUR
08:30	(Italy) S&P Global Construction PMI	Low	EUR
09:00	(Italy) Retail Sales MoM	High	EUR
09:00	(Italy) Retail Sales YoY	High	EUR
09:30	(Slovenia) Balance of Trade	Low	EUR
09:30	(United Kingdom) S&P Global/CIPS Construction PMI	Medium	GBP
10:00	(France) New Car Registrations YoY	Low	EUR
10:00	(Euro Area) Retail Sales YoY	High	EUR
10:00	(Euro Area) Retail Sales MoM	High	EUR
11:00	(Luxembourg) Inflation Rate YoY	Low	EUR
11:00	(Luxembourg) Inflation Rate MoM	Low	EUR
11:00	(Spain) Consumer Confidence	Medium	EUR
13:30	(Canada) Average Hourly Wages YoY	Low	CAD
13:30	(Canada) Full Time Employment Chg	Medium	CAD
13:30	(Canada) Part Time Employment Chg	Medium	CAD
13:30	(Canada) Participation Rate	Medium	CAD
13:30	(Canada) Employment Change	High	CAD
13:30	(Canada) Unemployment Rate	High	CAD
13:30	(United States) Manufacturing Payrolls	Low	USD
13:30	(United States) Nonfarm Payrolls Private	High	USD
13:30	(United States) Non Farm Payrolls	High	USD
13:30	(United States) Unemployment Rate	High	USD
13:30	(United States) Government Payrolls	Low	USD
13:30	(United States) Participation Rate	Medium	USD
13:30	(United States) Average Weekly Hours	Low	USD
13:30	(United States) Average Hourly Earnings MoM	Medium	USD
13:30	(United States) Average Hourly Earnings YoY	Medium	USD
14:30	(United States) Used Car Prices MoM	Low	USD
14:30	(United States) Used Car Prices YoY	Low	USD
15:00	(Ecuador) Inflation Rate YoY	Low	USD
15:00	(El Salvador) Inflation Rate YoY	Low	USD
15:00	(El Salvador) Inflation Rate MoM	Low	USD
18:00	(United States) Baker Hughes Oil Rig Count	Low	USD
18:00	(United States) Baker Hughes Total Rig Count	Low	USD
20:00	(United States) Consumer Credit Change	Low	USD

Today's Scenario: - The USD/JPY pair is on a downward trend for the fourth day in a row as the bears edge closer to the weekly low, currently trading down 0.30% at around 133.85 in the early Friday session. The Yen pair is seeing a renewed intraday low as it benefits from the US Dollar's weakness ahead of the crucial US employment report for April. Despite Japan's holidays, it has failed to challenge the sellers.

The US Dollar Index (DXY) is being sold off, reversing the previous day's corrective bounce from a one-week low near 101.15. As a result, the greenback's gauge versus six major currencies suggests that the market believes the Federal Reserve (Fed) is well on its way to a policy pivot, especially given the recently mixed US data and Fed meeting. The Fed Fund Futures further indicate that the odds of a rate cut in late 2023 are increasing.

Buy Scenario: - The USD/JPY pair needs to surpass the pivot level of 134.22 to aim for the First Major Resistance Level (R1) at 134.94. A break above Thursday's high of 134.881 would indicate a bullish session for the USD/JPY, but this would require support from both market sentiment and US economic indicators.

If the bullish momentum continues, the next target for the buyers would be the Second Major Resistance Level (R2) at 135.60, followed by the Third Major Resistance Level (R3) at 136.31. Till we did not advise to buy in USD/JPY.

Sell Scenario: - During early Friday in Asia, USD/JPY hits an intraday low near 134.20 as bears maintain control. The Yen pair is following bearish signals from the options market, which is enticing USD/JPY sellers. The one-month risk reversal (RR), which measures call options versus put options, has dropped for the third consecutive day to -0.305. The weekly basis shows a drop to -0.585, the most bearish count since late December 2022, which favors USD/JPY sellers. Therefore, despite Japan's holiday and the US Nonfarm Payrolls report, major options market players are bearish on USD/JPY prices.

However, if the USD/JPY fails to move past the pivot level, the First Major Support Level (S1) at 133.56 is likely to come into play. Unless there is a significant sell-off in the US dollar, the pair should avoid falling below the 132.84 support level, known as the Second Major Support Level (S2). The Third Major Support Level (S3) is located at 132.19. Till we did not advise to sell the position in USD/JPY.

Support and Resistance Level: -