Daily Analysis For USD/JPY   05-05-2023

Daily Analysis For USD/JPY 05-05-2023

USD/JPY Analysis
Economic Events and Scenario for USD/JPY
Economic Events: -
01:00(Japan) International Children's DayNoneJPY
01:00(Netherlands) Liberation DayNoneEUR
02:30(Australia) Home Loans MoMMediumAUD
02:30(Australia) Investment Lending for HomesMediumAUD
02:30(Australia) RBA Statement on Monetary PolicyMediumAUD
02:45(China) Caixin Composite PMILowCNY
02:45(China) Caixin Services PMIHighCNY
06:45(Switzerland) Unemployment RateHighCHF
07:00(Germany) Factory Orders MoMMediumEUR
07:30(Switzerland) Inflation Rate MoMLowCHF
07:30(Switzerland) Inflation Rate YoYMediumCHF
07:30(Switzerland) CPIHighCHF
07:45(France) Industrial Production MoMMediumEUR
07:45(France) Private Non Farm Payrolls QoQLowEUR
08:00(Austria) Wholesale Prices YoYLowEUR
08:00(Austria) Wholesale Prices MoMLowEUR
08:00(Austria) Balance of TradeLowEUR
08:00(Slovakia) Retail Sales YoYLowEUR
08:00(Slovakia) Retail Sales MoMLowEUR
08:00(Spain) Industrial Production YoYLowEUR
08:00(Switzerland) Foreign Exchange ReservesLowCHF
08:30(Euro Area) S&P Global Construction PMILowEUR
08:30(France) S&P Global Construction PMILowEUR
08:30(Germany) S&P Global Construction PMIMediumEUR
08:30(Italy) S&P Global Construction PMILowEUR
09:00(Italy) Retail Sales MoMHighEUR
09:00(Italy) Retail Sales YoYHighEUR
09:30(Slovenia) Balance of TradeLowEUR
09:30(United Kingdom) S&P Global/CIPS Construction PMIMediumGBP
10:00(France) New Car Registrations YoYLowEUR
10:00(Euro Area) Retail Sales YoYHighEUR
10:00(Euro Area) Retail Sales MoMHighEUR
11:00(Luxembourg) Inflation Rate YoYLowEUR
11:00(Luxembourg) Inflation Rate MoMLowEUR
11:00(Spain) Consumer ConfidenceMediumEUR
13:30(Canada) Average Hourly Wages YoYLowCAD
13:30(Canada) Full Time Employment ChgMediumCAD
13:30(Canada) Part Time Employment ChgMediumCAD
13:30(Canada) Participation RateMediumCAD
13:30(Canada) Employment ChangeHighCAD
13:30(Canada) Unemployment RateHighCAD
13:30(United States) Manufacturing PayrollsLowUSD
13:30(United States) Nonfarm Payrolls PrivateHighUSD
13:30(United States) Non Farm PayrollsHighUSD
13:30(United States) Unemployment RateHighUSD
13:30(United States) Government PayrollsLowUSD
13:30(United States) Participation RateMediumUSD
13:30(United States) Average Weekly HoursLowUSD
13:30(United States) Average Hourly Earnings MoMMediumUSD
13:30(United States) Average Hourly Earnings YoYMediumUSD
14:30(United States) Used Car Prices MoMLowUSD
14:30(United States) Used Car Prices YoYLowUSD
15:00(Ecuador) Inflation Rate YoYLowUSD
15:00(El Salvador) Inflation Rate YoYLowUSD
15:00(El Salvador) Inflation Rate MoMLowUSD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD
20:00(United States) Consumer Credit ChangeLowUSD

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: -
S1 133.56-R1 134.94
S2 132.84-R2 135.60
S3 132.19-R3 136.31


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