Published on May 23, 2023

Daily Analysis For USD/JPY 23-05-2023

USD/JPY Analysis

Economic Events and Scenario for USD/JPY

Economic Events: -

GMT	Event	Impact	Currency
00:00	(Australia) Judo Bank Composite PMI	Low	AUD
00:00	(Australia) Judo Bank Manufacturing PMI	High	AUD
00:00	(Australia) Judo Bank Services PMI	High	AUD
01:00	(Montenegro) Independence Day	None	EUR
01:30	(Japan) Jibun Bank Manufacturing PMI	Medium	JPY
01:30	(Japan) Jibun Bank Services PMI	Medium	JPY
01:30	(Japan) Jibun Bank Composite PMI	Low	JPY
07:00	(Lithuania) Industrial Production MoM	Low	EUR
07:00	(Lithuania) Industrial Production YoY	Low	EUR
07:00	(United Kingdom) Public Sector Net Borrowing	Low	GBP
07:00	(United Kingdom) Public Sector Net Borrowing Ex Banks	Low	GBP
08:00	(Slovakia) Current Account	Low	EUR
08:15	(France) S&P Global Composite PMI	Low	EUR
08:15	(France) S&P Global Manufacturing PMI	Medium	EUR
08:15	(France) S&P Global Services PMI	Medium	EUR
08:15	(Euro Area) ECB Guindos Speech	High	EUR
08:15	(Euro Area) ECB Jochnick Speech	Low	EUR
08:30	(Germany) S&P Global Composite PMI	Low	EUR
08:30	(Germany) S&P Global Services PMI	High	EUR
08:30	(Germany) S&P Global Manufacturing PMI	High	EUR
09:00	(Euro Area) Current Account	Low	EUR
09:00	(Euro Area) S&P Global Composite PMI	Low	EUR
09:00	(Euro Area) S&P Global Services PMI	High	EUR
09:00	(Euro Area) S&P Global Manufacturing PMI	High	EUR
09:00	(Euro Area) Current Account s.a	Low	EUR
09:30	(Slovenia) Consumer Confidence	Low	EUR
09:30	(United Kingdom) S&P Global/CIPS Manufacturing PMI	High	GBP
09:30	(United Kingdom) S&P Global/CIPS UK Services PMI	High	GBP
09:30	(United Kingdom) S&P Global/CIPS Composite PMI	Low	GBP
10:00	(Italy) Current Account	Low	EUR
10:00	(United Kingdom) 28-Year Index-Linked Treasury Gilt Auction	Low	GBP
10:30	(Germany) 2-Year Schatz Auction	Low	EUR
11:00	(Latvia) PPI YoY	Low	EUR
11:00	(Latvia) PPI MoM	Low	EUR
11:25	(Euro Area) ECB Enria Speech	Low	EUR
13:00	(United States) Building Permits	Medium	USD
13:00	(United States) Building Permits MoM	Low	USD
13:30	(Canada) Raw Materials Prices YoY	Low	CAD
13:30	(Canada) Raw Materials Prices MoM	Low	CAD
13:30	(Canada) PPI YoY	Low	CAD
13:30	(Canada) PPI MoM	Low	CAD
13:55	(United States) Redbook YoY	Low	USD
14:00	(United States) Fed Logan Speech	Medium	USD
14:45	(United States) S&P Global Services PMI	High	USD
14:45	(United States) S&P Global Composite PMI	Medium	USD
14:45	(United States) S&P Global Manufacturing PMI	High	USD
15:00	(United States) Richmond Fed Manufacturing Shipments Index	Low	USD
15:00	(United States) New Home Sales MoM	High	USD
15:00	(United States) Richmond Fed Services Index	Low	USD
15:00	(United States) New Home Sales	High	USD
15:00	(United States) Richmond Fed Manufacturing Index	Low	USD
15:30	(Slovenia) Unemployment Rate	Low	EUR
18:00	(United States) 2-Year Note Auction	Low	USD
20:00	(El Salvador) Balance of Trade	Low	USD
21:30	(United States) API Crude Oil Stock Change	Medium	USD
23:45	(New Zealand) Retail Sales YoY	High	NZD
23:45	(New Zealand) Retail Sales QoQ	High	NZD

Today's Scenario: - The USD/JPY pair encountered selling pressure following the conclusion of a meeting between US President Joe Biden and House of Representatives Speaker Kevin McCarthy, where no agreement was reached. Speaker McCarthy described the meeting as productive, but an agreement has not been reached thus far. President Biden rejected the proposed spending cuts in the budget, referring to them as "extreme," while Republicans are not in favor of implementing new taxes on the wealthy community.

Buy Scenario: - USD/JPY is experiencing a rise to its highest levels since November, benefiting from the overall strength of the US Dollar. This upward movement continues into early Tuesday in Europe, with the pair showing modest gains around 138.80 at the present time.

The USD/JPY is currently maintaining its strength within a three-week ascending triangle pattern, approaching the upper trendline of the chart pattern. However, it is important to note that the overbought RSI (14) and the immediate hurdle near 139.00 could present a challenge for buyers of the Yen pair.

If the quote manages to surpass the 139.00 hurdle, additional resistance can be expected near the November 30, 2022 peak around 139.90, as well as the psychological level of 140.00. These levels may act as further barriers for the bulls before they can gain full control. Beyond that, the September 2022 low of 140.35 may serve as the final defense for USD/JPY bears. Till we did not advise to buy in USD/JPY.

Sell Scenario: - On the downside, a pullback in the USD/JPY pair is unlikely unless it falls below the lower trendline of the aforementioned triangle, which is approximately near the 138.00 level.

In the event that the Yen pair breaks below the 138.00 support, a horizontal support level established over the past week in the mid-135.00s and the 200-day simple moving average (SMA) around 134.90 could pose a challenge for the bears.

It should be noted that for USD/JPY sellers to regain control, confirmation would be required from an upward-sloping support line originating from late March, which is currently close to 134.65.

Overall, USD/JPY is likely to maintain its strength, but it is important to acknowledge that the path to the upside may be long and filled with obstacles. Till we did not advise to sell the position in USD/JPY.

Support and Resistance Level: -