Daily Analysis For USD/JPY   22-05-2023

Daily Analysis For USD/JPY 22-05-2023

USD/JPY Analysis
Economic Events and Scenario for USD/JPY
Economic Events: -
00:50(Japan) Machinery Orders YoYMediumJPY
00:50(Japan) Machinery Orders MoMMediumJPY
01:00(Canada) Victoria DayNoneCAD
01:00(Montenegro) Independence DayNoneEUR
02:15(China) Loan Prime Rate 1YMediumCNY
02:15(China) Loan Prime Rate 5YMediumCNY
05:30(Netherlands) Consumer ConfidenceMediumEUR
06:00(Estonia) PPI YoYLowEUR
06:00(Estonia) PPI MoMLowEUR
07:30(Switzerland) Industrial Production YoYMediumCHF
08:00(Slovakia) Current AccountLowEUR
09:00(Greece) Current AccountLowEUR
09:00(Australia) Myfxbook AUDUSD SentimentMediumAUD
09:00(Switzerland) Myfxbook USDCHF SentimentMediumCHF
09:00(Japan) Myfxbook USDJPY SentimentMediumJPY
09:00(European Union) Myfxbook EURUSD SentimentMediumEUR
09:00(United Kingdom) Myfxbook GBPUSD SentimentMediumGBP
09:00(Canada) Myfxbook USDCAD SentimentMediumCAD
09:00(New Zealand) Myfxbook NZDUSD SentimentMediumNZD
10:00(Belgium) Consumer ConfidenceLowEUR
10:00(Euro Area) Construction Output YoYLowEUR
10:45(European Union) EU Bond AuctionLowEUR
11:00(Ireland) Wholesale Prices MoMLowEUR
11:00(Ireland) Wholesale Prices YoYLowEUR
11:00(Luxembourg) Unemployment RateLowEUR
11:30(Portugal) Current AccountLowEUR
13:00(Kosovo) Balance of TradeLowEUR
13:30(United States) Fed Bullard SpeechMediumUSD
14:00(France) 3-Month BTF AuctionLowEUR
14:00(France) 12-Month BTF AuctionLowEUR
14:00(France) 6-Month BTF AuctionLowEUR
15:00(Euro Area) Consumer ConfidenceMediumEUR
15:50(United States) Fed Barkin SpeechMediumUSD
15:50(United States) Fed Bostic SpeechMediumUSD
16:30(United States) 3-Month Bill AuctionLowUSD
16:30(United States) 6-Month Bill AuctionLowUSD
20:00(El Salvador) Balance of TradeLowUSD

Today's Scenario: - During the Asian session, the USD/JPY pair has retraced towards the critical support level of 137.50. Given the delay in raising the US debt ceiling, which has caused turmoil in global markets, it is anticipated that the pair will experience further losses below this support level.
Although S&P 500 futures have recovered some of the earlier losses seen in Asian trading, the overall market sentiment remains risk-averse due to the increasing likelihood of a US Treasury default. US President Joe Biden has rejected the current bipartisan agreement with House of Representatives Kevin McCarthy, deeming it unacceptable. Furthermore, Biden has proposed measures to prevent Democrats from winning re-elections in 2024.

Buy Scenario: - On the upside, if a recovery occurs, USD/JPY may target the recent swing high near 138.75 initially.
However, prior to that, the 50% Fibonacci retracement level of the pair's downturn from October 2022 to January 2023, close to 139.60, would pose a challenge for short-term buyers. This is followed by the late November 2022 peak around 139.90 and the psychological level of 140.00.
If USD/JPY bulls maintain control beyond 140.00, there could be a potential upward trajectory towards the 61.8% Fibonacci retracement level near 142.50. Till we did not advise to buy in USD/JPY.

Sell Scenario: - USD/JPY is currently hovering near the 137.70-60 range, testing a long-standing support line that previously acted as resistance. This comes after a reversal from the highest levels seen since late November 2022.
It is important to note that the bullish signals from the MACD indicator align with the aforementioned resistance-turned-support line, which dates back to mid-December 2022, approximately around 137.65. This presents a challenge for USD/JPY bears.
Even if the pair closes below 137.65 on a daily basis, there are potential barriers to further downside. The 200-day moving average (DMA) level around 137.10, followed by the round figure of 137.00, could limit further declines.
In the event that USD/JPY drops below 137.00, there is a possibility of a decline towards the early April swing high around 135.15. Beyond that, the two-month ascending support line near 134.55 could 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: -
S1 137.35-R1 138.66
S2 136.74-R2 139.35
S3 136.05-R3 139.96


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