Published on May 15, 2023

Daily Analysis For USD/JPY 15-05-2023

USD/JPY Analysis

Economic Events and Scenario for USD/JPY

Economic Events: -

GMT	Event	Impact	Currency
00:50	(Japan) PPI YoY	Low	JPY
00:50	(Japan) PPI MoM	Low	JPY
01:00	(Euro Area) Eurogroup Meeting	Medium	EUR
01:01	(Ireland) Construction PMI	Low	EUR
02:30	(Australia) Building Permits MoM	Low	AUD
02:30	(Australia) Private House Approvals MoM	Low	AUD
02:30	(Australia) Building Permits YoY	Low	AUD
02:30	(China) PBoC 1-Year MLF Announcement	Low	CNY
04:45	(Japan) 5-Year JGB Auction	Low	JPY
06:00	(Estonia) Unemployment Rate	Low	EUR
06:00	(Finland) CPI	Low	EUR
06:00	(Finland) Inflation Rate YoY	Low	EUR
06:00	(Finland) Inflation Rate MoM	Low	EUR
07:00	(Germany) Wholesale Prices MoM	Medium	EUR
07:00	(Germany) Wholesale Prices YoY	Medium	EUR
07:00	(Japan) Machine Tool Orders YoY	Low	JPY
07:30	(Switzerland) Producer & Import Prices YoY	Low	CHF
07:30	(Switzerland) Producer & Import Prices MoM	Low	CHF
08:00	(China) FDI (YTD) YoY	Medium	CNY
08:00	(Lithuania) Current Account	Low	EUR
08:00	(Slovakia) Inflation Rate YoY	Low	EUR
08:00	(Slovakia) Core Inflation Rate YoY	Low	EUR
08:00	(Slovakia) Core Inflation Rate MoM	Low	EUR
08:00	(Slovakia) CPI	Low	EUR
08:00	(Slovakia) Inflation Rate MoM	Low	EUR
09:00	(Australia) Myfxbook AUDUSD Sentiment	Medium	AUD
09:00	(Switzerland) Myfxbook USDCHF Sentiment	Medium	CHF
09:00	(Japan) Myfxbook USDJPY Sentiment	Medium	JPY
09:00	(European Union) Myfxbook EURUSD Sentiment	Medium	EUR
09:00	(United Kingdom) Myfxbook GBPUSD Sentiment	Medium	GBP
09:00	(Canada) Myfxbook USDCAD Sentiment	Medium	CAD
09:00	(New Zealand) Myfxbook NZDUSD Sentiment	Medium	NZD
10:00	(Belgium) Construction Output YoY	Low	EUR
10:00	(Euro Area) Industrial Production MoM	Medium	EUR
10:00	(Euro Area) Industrial Production YoY	Low	EUR
10:30	(Germany) 12-Month Bubill Auction	Low	EUR
11:00	(Spain) Consumer Confidence	Medium	EUR
11:00	(Latvia) Current Account	Low	EUR
11:00	(Ireland) Balance of Trade	Low	EUR
13:15	(Canada) Housing Starts	Medium	CAD
13:30	(Canada) Wholesale Sales MoM	Low	CAD
13:30	(United States) NY Empire State Manufacturing Index	Medium	USD
13:45	(United States) Fed Bostic Speech	Medium	USD
14:00	(Belgium) Balance of Trade	Low	EUR
14:00	(France) 3-Month BTF Auction	Low	EUR
14:00	(France) 12-Month BTF Auction	Low	EUR
14:00	(France) 6-Month BTF Auction	Low	EUR
14:15	(United States) Fed Kashkari Speech	Medium	USD
15:00	(Canada) Financial System Survey	Medium	CAD
16:30	(United States) 3-Month Bill Auction	Low	USD
16:30	(United States) 6-Month Bill Auction	Low	USD
17:30	(United States) Fed Barkin Speech	Medium	USD
21:00	(United States) Foreign Bond Investment	Low	USD
21:00	(United States) Overall Net Capital Flows	Low	USD
21:00	(United States) Net Long-term TIC Flows	Medium	USD
22:00	(United States) Fed Cook Speech	Medium	USD

Today's Scenario: - USD/JPY continues its three-day winning streak, trading near 135.80, despite a slight pullback from the highest level in eight days as Tokyo opens on Monday. The movement of the Yen pair is influenced by the overall strength of the US Dollar in a risk-off environment. Additionally, it is supported by softer economic data from Japan and dovish remarks made by Bank of Japan (BoJ) Governor Kazuo Ueda.

Japan's Producer Price Index (PPI) for April recently showed a decline of 0.2% on a monthly basis and 5.8% on a yearly basis, falling short of expectations of 0.3% and 6.0% respectively. This weaker inflation data aligns with Governor Ueda's defense of the BoJ's accommodative monetary policy. In his latest comments reported by Reuters, Governor Ueda stated, "The central bank will maintain ultra-low interest rates until the recent cost-push inflation shifts into sustained price growth driven by robust domestic demand, and accompanied by higher wages."

Buy Scenario: - USD/JPY is showing strength and remains firm around 136.00, marking a three-day uptrend and reaching a one-week high in early Monday trading.

The Yen pair is benefiting from the previous day's breakout above a horizontal resistance area that has been in place since April 28, near 135.50. Additionally, it successfully surpassed the 200-hour moving average (HMA) level around 134.90.

However, there is a horizontal resistance zone that has been in existence for the past 11 days, which, combined with the overbought reading on the relative strength index (RSI) with a period of 14 and sluggish signals from the moving average convergence divergence (MACD), is hindering further gains for the USD/JPY bulls around the 136.40-45 resistance area.

If the buyers of the Yen pair manage to overlook the aforementioned obstacles, there is a possibility of a rally towards the previous monthly high around 137.80, followed quickly by the yearly high set in March near 137.90. The 138.00 level could be the next threshold to watch. Till we did not advise to buy in USD/JPY.

Sell Scenario: - On the downside, if the mentioned HMAs near 134.90-80 are broken, it does not necessarily imply a clear path for the USD/JPY bears, as an upward-sloping support line from April 26, close to 134.00, may act as the final defense for the buyers.

Overall, USD/JPY could experience further upward movement, although there may be limited room for gains in the near term. Till we did not advise to sell the position in USD/JPY.

Support and Resistance Level: -