Daily Analysis For USD/JPY   15-06-2023

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.


Support and Resistance Level: -

Support          Resistance  

S1 139.46   -  R1 140.47

S2 138.87  -   R2 140.88

S3 138.46  -   R3 141.47


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