Published on Jun 15, 2023

Daily Analysis For USD/JPY 15-06-2023

USD/JPY Analysis

Key Points: -

· On Thursday, the USD/JPY pair attracts buying interest as it seeks to extend the late rebound witnessed in the previous day.

· The hawkish outlook from the Federal Reserve provides support to the US Dollar (USD) and acts as a favorable factor for the major currency pair.

· Traders are now focusing on significant macroeconomic data releases from the United States, which could provide momentum before the Bank of Japan (BoJ) meeting on Friday.

Today's Scenario: -

The USD/JPY pair shows a slight increase in the Asian session on Thursday, aiming to continue the rebound that occurred late in the previous day, with a gain of more than 70 pips from the 139.30-139.25 range. Currently, the pair hovers just above the psychological level of 140.00, flirting with the upper end of the trading range observed over the past three weeks.

The US Dollar (USD) appears to have stabilized above a one-month low reached on the previous day, providing support to the USD/JPY pair. This uptick in the USD can be attributed to the Federal Reserve's hawkish outlook and its intention to resume raising interest rates. As expected, the US central bank maintained interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday, but signaled that there will likely be a 50 basis point increase by the end of December.

During the post-meeting press conference, Fed Chair Jerome Powell noted that the US economy and job market are performing better than expected. He also mentioned that the decision to pause the rate hikes was a precautionary measure to gather more information before deciding on further rate increases. The markets, however, have reacted quickly and are now pricing in a higher probability of a 25 basis point rate hike at the July FOMC meeting. This contributes to the support of the US Dollar and acts as a favorable factor for the USD/JPY pair.

On the other hand, the Bank of Japan (BoJ) is expected to maintain its dovish stance to support the economy and sustain the recent positive signs. BoJ Deputy Governor Masazumi Wakatabe reaffirmed this stance earlier in the week, stating that there are compelling reasons to continue with the ultra-easy monetary policy measures. This divergence in monetary policy between the US and Japan further assists the USD/JPY pair in attracting buyers and pushing higher on Thursday.

However, the upside potential may be limited as traders may prefer to remain cautious ahead of the BoJ's monetary policy meeting on Friday. Nonetheless, the overall fundamental backdrop favors bullish traders and indicates that the path of least resistance for the USD/JPY pair is to the upside. Market participants are now focused on key US economic indicators such as monthly Retail Sales, Weekly Initial Jobless Claims, Empire State Manufacturing Index, Philly Fed Manufacturing Index, and Industrial Production, which could provide a fresh impetus.

Diagram of USD/JPY: -

Economic Events: -

Date Event Impact Currency

0:00 (United States) Fed Press Conference High USD

4:15 (New Zealand) GDP Growth Rate YoY Medium NZD

4:15 (New Zealand) GDP Growth Rate QoQ Medium NZD

5:20 (Japan) Foreign Bond Investment Low JPY

5:20 (Japan) Stock Investment by Foreigners Low JPY

5:20 (Japan) Machinery Orders YoY Medium JPY

5:20 (Japan) Machinery Orders MoM Medium JPY

5:20 (Japan) Imports YoY Low JPY

5:20 (Japan) Balance of Trade High JPY

5:20 (Japan) Exports YoY Medium JPY

5:30 (Euro Area) Eurogroup Meeting Medium EUR

7:00 (Australia) Consumer Inflation Expectations Low AUD

7:00 (Australia) Part Time Employment Chg Medium AUD

7:00 (Australia) Participation Rate Low AUD

7:00 (Australia) Full Time Employment Chg Medium AUD

7:00 (Australia) Unemployment Rate High AUD

7:00 (Australia) Employment Change High AUD

7:00 (Australia) RBA Bulletin Medium AUD

7:00 (China) PBoC 1-Year MLF Announcement Low CNY

7:00 (China) House Price Index YoY Medium CNY

7:30 (China) Unemployment Rate High CNY

7:30 (China) Retail Sales YoY High CNY

7:30 (China) Industrial Production YoY High CNY

7:30 (China) Fixed Asset Investment (YTD) YoY Medium CNY

9:05 (Japan) 3-Month Bill Auction Low JPY

10:00 (Japan) Tertiary Industry Index MoM Low JPY

10:00 (Netherlands) Unemployment Rate Medium EUR

10:30 (Finland) GDP YoY Low EUR

12:00 (Switzerland) Producer & Import Prices MoM Low CHF

12:00 (Switzerland) Producer & Import Prices YoY Low CHF

12:15 (France) Inflation Rate MoM Medium EUR

12:15 (France) Inflation Rate YoY Medium EUR

12:15 (France) Harmonised Inflation Rate MoM Low EUR

12:15 (France) Harmonised Inflation Rate YoY Low EUR

13:30 (Spain) Balance of Trade Medium EUR

14:10 (Spain) Obligacion Auction Low EUR

14:10 (Spain) Bonos Auction Low EUR

14:30 (Euro Area) Balance of Trade Medium EUR

14:30 (France) 5-Year OAT Auction Low EUR

14:30 (France) 3-Year OAT Auction Low EUR

14:30 (Greece) Construction Output YoY Low EUR

14:30 (Montenegro) Inflation Rate YoY Low EUR

14:30 (Montenegro) Harmonised Inflation Rate YoY Low EUR

14:30 (Montenegro) Inflation Rate MoM Low EUR

15:00 (Belgium) Construction Output YoY Low EUR

15:30 (France) 10-Year Index-Linked OAT Auction Low EUR

15:30 (Ireland) Balance of Trade Low EUR

16:00 (Portugal) Economic Activity YoY Low EUR

16:00 (Portugal) Private Consumption YoY Low EUR

17:45 (Canada) Housing Starts Medium CAD

17:45 (Euro Area) ECB Interest Rate Decision High EUR

17:45 (Euro Area) Marginal Lending Rate Low EUR

17:45 (Euro Area) Deposit Facility Rate High EUR

18:00 (Canada) Manufacturing Sales MoM Low CAD

18:00 (United States) Import Prices YoY Low USD

18:00 (United States) Export Prices YoY Low USD

18:00 (United States) Import Prices MoM Medium USD

18:00 (United States) Export Prices MoM Medium USD

18:00 (United States) NY Empire State Manufacturing Index Medium USD

18:00 (United States) Retail Sales YoY High USD

18:00 (United States) Retail Sales Ex Autos MoM High USD

18:00 (United States) Retail Sales MoM High USD

18:00 (United States) Philly Fed Business Conditions Low USD

18:00 (United States) Philly Fed Employment Low USD

18:00 (United States) Philly Fed CAPEX Index Low USD

18:00 (United States) Philly Fed Prices Paid Low USD

18:00 (United States) Philly Fed New Orders Low USD

18:00 (United States) Philadelphia Fed Manufacturing Index Medium USD

18:00 (United States) Jobless Claims 4-week Average High USD

18:00 (United States) Continuing Jobless Claims High USD

18:00 (United States) Initial Jobless Claims High USD

18:00 (United States) Retail Sales Ex Gas/Autos MoM High USD

18:15 (Euro Area) ECB Press Conference High EUR

18:30 (Belgium) Balance of Trade Low EUR

18:30 (Kosovo) GDP Growth Rate YoY Low EUR

18:45 (United States) Capacity Utilization Low USD

18:45 (United States) Manufacturing Production YoY Low USD

18:45 (United States) Industrial Production YoY Medium USD

18:45 (United States) Industrial Production MoM Medium USD

18:45 (United States) Manufacturing Production MoM Low USD

19:30 (United States) Business Inventories MoM Medium USD

19:30 (United States) Retail Inventories Ex Autos MoM Low USD

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

21:00 (United States) 8-Week Bill Auction Low USD

21:00 (United States) 4-Week Bill Auction Low USD

21:05 (United Kingdom) BoE Cunliffe Speech Low GBP

21:30 (Canada) 2-Year Bond Auction Low CAD

21:30 (United States) 15-Year Mortgage Rate Low USD

21:30 (United States) 30-Year Mortgage Rate Low USD

Buy Scenario: -

From a technical analysis perspective, the USD/JPY pair currently holds a neutral stance in the short term as indicated by the red signals on the daily chart. The direction of the pair in the upcoming sessions will largely depend on the Federal Reserve's decision and market expectations for future meetings. A break above the 140.00 zone would indicate a continuation of the bullish trend, with further resistance levels located around 140.50 and a multi-month high around 140.90. Till we did not advise to buy in USD/JPY.

Sell Scenario: -

Having breached the 20-day Simple Moving Average (SMA) at the 139.45 level, the USD/JPY pair has found support levels at the psychological mark of 139.00 and the 200-day SMA at 137.25. Till we did not advise to sell the position in USD/JPY.