Daily Analysis For USD/JPY   14-06-2023

Daily Analysis For USD/JPY 14-06-2023

USD/JPY Analysis


Key Points: -


·       USD/JPY currency pair experiences a slight decline, although it lacks significant momentum to continue its downward movement.


·       The Japanese yen, considered a safe-haven currency, is benefiting from a more cautious market sentiment, which is acting as a hindrance for the pair.


·       The potential for further downside appears limited, as market attention remains focused on the crucial upcoming FOMC decision.


Today's Scenario: -


During the Asian trading session on Wednesday, the USD/JPY pair is observed trading within a narrow range, consolidating its recent gains. Currently, the pair hovers just above the psychological level of 140.00. Traders have adopted a cautious approach and eagerly await the outcome of the highly-anticipated FOMC policy meeting.


Scheduled for later today at 18:00 GMT, the Federal Reserve (Fed) is expected to announce its decision, widely anticipated to indicate a pause in its year-long cycle of interest rate hikes. This outlook has been reinforced by the latest US consumer inflation data released on Tuesday. The Consumer Price Index (CPI) showed minimal growth in May, with the annual increase being the smallest in over two years. According to the US Labor Department, the headline CPI rose by only 0.1% in May, following a 0.4% increase in April. This marks the 11th consecutive month of easing price pressures.


The year-on-year CPI growth slowed down from 4.9% in April to 4.0% in May, representing the smallest increase since March 2021. However, this figure still exceeds the Fed's 2% target, which could enable the Fed to maintain its hawkish stance. Additionally, the expectation of another 25 basis points rate hike at the July FOMC meeting, as reflected in market pricing, has led to a sharp increase in US Treasury bond yields overnight. This development provides some support to the US Dollar (USD), acting as a favorable factor for the USD/JPY pair and limiting potential significant declines.


Market sentiment leading up to the important central bank event exhibits signs of anxiety, reflected in a generally cautious attitude and a preference for safe-haven assets such as the Japanese Yen (JPY). As a result, some pressure is exerted on the USD/JPY pair. Nevertheless, it is expected that the Bank of Japan (BoJ) will maintain its accommodative stance to support the economy and sustain recent positive indicators, thereby curbing the strength of the JPY. Consequently, it is advisable to exercise caution before aggressively betting on a bearish movement in the USD/JPY pair or anticipating a substantial intraday corrective decline.


Diagram of USD/JPY: -


Economic Events: -

Date      Event                                                                                            Impact        Currency

 02:00   (United States) API Crude Oil Stock Change                  Medium             USD

 04:15   (New Zealand) Current Account                                                  Medium NZD

 05:30   (New Zealand) Food Inflation YoY                                         Low NZD

 10:00   (Netherlands) Balance of Trade                                                          Low  EUR

 10:30   (Finland) Inflation Rate YoY                                                                 Low  EUR

 10:30   (Finland) Inflation Rate MoM                                                              Low  EUR

 10:30   (Finland) CPI                                                                                         Low     EUR

 11:30   (United Kingdom) GDP 3-Month Avg                                          Medium GBP

 11:30   (United Kingdom) Goods Trade Balance Non-EU                              High GBP

 11:30   (United Kingdom) Balance of Trade                                      Low GBP

 11:30   (United Kingdom) Construction Output YoY                       Low GBP

 11:30   (United Kingdom) Industrial Production YoY                       Low GBP

 11:30   (United Kingdom) Industrial Production MoM                            Medium             GBP

 11:30   (United Kingdom) Manufacturing Production YoY             Low GBP

 11:30   (United Kingdom) Manufacturing Production MoM    Medium            GBP

 11:30   (United Kingdom) Goods Trade Balance                                            High GBP

 11:30   (United Kingdom) GDP YoY                                                                 Low  GBP

 11:30   (United Kingdom) GDP MoM                                                             High  GBP

 11:30   (Germany) Wholesale Prices MoM                               Medium EUR

 11:30   (Germany) Wholesale Prices YoY                                  Medium EUR

 12:30   (China) FDI (YTD) YoY                                                                   Medium   CNY

 12:30   (Slovakia) Inflation Rate MoM                                                            Low  EUR

 12:30   (Slovakia) Inflation Rate YoY                                                                Low  EUR

 12:30   (Slovakia) Core Inflation Rate MoM                                      Low EUR

 12:30   (Slovakia) Core Inflation Rate YoY                                        Low EUR

 12:30   (Slovakia) CPI                                                                                      Low      EUR

 13:30   (France) IEA Oil Market Report                                                   Medium  EUR

 14:30   (Euro Area) Industrial Production MoM                                     Medium EUR

 14:30   (Euro Area) Industrial Production YoY                                              Low  EUR

 14:30   (Montenegro) GDP Growth Rate YoY                                                Low  EUR

 15:00   (Germany) 10-Year Bund Auction                               Medium  EUR

 15:30   (Portugal) Inflation Rate MoM                                                          Low    EUR

 15:30   (Portugal) Inflation Rate YoY                                                             Low    EUR

 15:30   (Portugal) CPI                                                                                     Low       EUR

 15:30   (Ireland) Residential Property Prices YoY                                          Low  EUR

 15:30   (Ireland) Residential Property Prices MoM                       Low EUR

 16:30   (United States) MBA 30-Year Mortgage Rate                Medium USD

 16:30   (United States) MBA Mortgage Applications                      Low USD

 16:30   (United States) MBA Mortgage Refinance Index                              Low USD

 16:30   (United States) MBA Mortgage Market Index                                  Low USD

 16:30   (United States) MBA Purchase Index                                                 Low  USD

 17:00   (United Kingdom) NIESR Monthly GDP Tracker                               Low GBP

 18:00   (Canada) New Motor Vehicle Sales                                     Low  CAD

 18:00   (United States) Core PPI MoM                                                  Medium    USD

 18:00   (United States) Core PPI YoY                                                             Low    USD

 18:00   (United States) PPI YoY                                                                      Low     USD

 18:00   (United States) PPI MoM                                                     High  USD

 20:00   (United States) EIA Heating Oil Stocks Change                                  Low USD

 20:00   (United States) EIA Refinery Crude Runs Change                              Low USD

 20:00   (United States) EIA Crude Oil Stocks Change               Medium USD

 20:00   (United States) EIA Distillate Stocks Change                      Low USD

 20:00   (United States) EIA Gasoline Production Change                             Low USD

 20:00   (United States) EIA Crude Oil Imports Change                                 Low USD

 20:00   (United States) EIA Gasoline Stocks Change                Medium USD

 20:00   (United States) EIA Cushing Crude Oil Stocks Change         Low              USD

 20:00   (United States) EIA Distillate Fuel Production Change         Low              USD

 21:00   (United States) 17-Week Bill Auction                                                 Low USD

 23:30   (United States) Fed Interest Rate Decision                          High              USD

 23:30   (United States) FOMC Economic Projections                        High              USD

 23:30   (United States) Interest Rate Projection - 1st Yr                           Medium            USD

 23:30   (United States) Interest Rate Projection - 2nd Yr                         Medium            USD

 23:30   (United States) Interest Rate Projection - Current        Medium            USD

 23:30   (United States) Interest Rate Projection - Longer                        Medium             USD

Buy Scenario: -


If a recovery occurs, the initial targets could be the previous monthly high around 140.90, followed by the round figure of 141.00.


Subsequently, the attention of USD/JPY bulls may shift to the 61.8% Fibonacci Expansion (FE) level of the price movement between May 16 and June 01, located near 141.70.


If the pair manages to sustain strength above 141.70, the threshold of 142.00 and the late November 2022 peak around 142.25 may pose challenges for the buyers. Till we did not advise to buy in USD/JPY.


Sell Scenario: -


The Yen pair remains in focus for bullish traders unless it manages to break below the mentioned trend line, currently positioned around 139.90.


Even if the quote breaches the 139.90 level, there are potential challenges for USD/JPY sellers in the form of the 100-bar Exponential Moving Average (EMA) around 139.10 and the monthly low near 138.40.


Should the quote decline beyond 138.40, the 200-EMA support at 138.00 will serve as the final defense for USD/JPY buyers. Till we did not advise to sell the position in USD/JPY.


Support and Resistance Level: -

Support          Resistance  

S1 139.39   -  R1 140.68

S2 138.55  -   R2 141.14

S3 138.09  -   R3 141.98


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