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USDJPY 4 HOUR: Path of least resistance
Trend: Retracement risks stalling Momentum: Up stalled
Extending its trade around 160 to 4 days in a row. Pause just above 159.40 so far checking the downside and keeping focus on 160. Below 159.40 would shift focus from 160 to layers of support from 158.99-159.24 below it6. Meanwhile, market follows the path of least resistance buying JPY on its crosses.
Forex Market Snapshot: New month, new ball game
As suggested yesterday, USD selling appeared to be driven by month end related flows and this has proved to be the case with the currency firming today although for the most part with limited follow through (AUD and NZD) underperforming as mood turns tio risk off).
The focus, meanwhile, is not on forex but on rising oil prices that have helped trigger what is being described as a rout (i.e. higher yields) in the global bond market (e.g. JGB 10 year hit 3%, a 30 year high).
In forex, the USDJPY test of 160+ again (3rd day) between 160.29 and 160.02) has raised an intervention alert, which is being encouraged by Treasury Secretary Bessent comments calling for a firmer JPY.
Looking ahead, US ISM PMI highlights the economic calendar with added attention on the prices paid component.
USDJPY DAILY: Where is resistance?
Bessent says disorderly yen moves can destabilize global markets (Reuters)While USDJPY 160 is the obvious focus, the BoJ intervention ambush, supported by Treasury Secretary Bessent, has left little in the way of resistance other than 160.64 = =61.8% OF 163.98 => 155.23
in this case, the threat of intervention is likely more of a deterrent than the actual event, which should it occur would find likely buyers at lower levels (unless 155.23 is broken).
In the meantime, 160 is pivotal (Friday high 160.20) with support starting at the former 159.78 high
Forex Market Snapshot
The dollar seems set to end the week on the defensive as it trades lower ahead of the US open. US bond yields have steadied and stocks are up but talk the U.S. fiscal position, with the total deficit surpassing $40 trillion grabbing headlines and rising, is acting as a weight on the dollar.
- AUD and NZD outperforming,
- USDJPY is weaker after completing a 61.8% retracement (159.11) but is still above 158
- GBPUSD has extended its high, marginally so far, through a 1.3658 target
- EURUSD retested its 1.1710 high, holding so far
- USDCAD extended its low but so far holding above 1.3730 support
USDJPY 4 HOUR: Confounding
Bounce off (just above) 158.00 and a higher low confounding the general bearish USD trend.
Charts show little until 159.77 other than 159.105 = 61.8% so look for 159.00 to be pivotal.
No apparent catalyst other than the uptick in US yields and weak JPY crosses (vs. Gold and Crypto as well).
Forex Market Snapshot
Crude oil holding firm and long dated Treasury yields near multi-decade highs amid US-Iran uncertainty have set a risk off mood, This has seen the dollar trade on the firmer side akthough so far with limnited follow through.
NZD is underperforming while USDJPY too a step closer to 160 (High 159.78) but no further given the risk of a BoJ ambush.
USDJPY 1 HOUR: Wary of the BoJ
Trend: Mixed (short up, long term down)
Momentum: Mixed
Traders will be on BoJ intervention alert between 159.50-00 even though key chart resistance is not until 160-161 with 160.53 = 61.8%
Barring a BoJ ambush, expect support below the market while trade is above 158.85
USDJPY 1 HOUR – Yields confound
Trend: Down Momentum: Stalled?
Bounce in US yields despite weaker US data confounding the bears and has lifted USDJPY. USDJPY bounce from a pause above 158.57 would need to establish above 159.50 to put 160 and a BoJ alert in play.
Elsewhere EURUSD failed to hold a break of 1.1581 and GBPUSD failed to hold its 1.3550 break.
US yields ticking up after front running lower ahead of data (2 year yield now close to unchanged on the day, 10 year up)
Seeing some modest correlations with USD following (cautiously as there should be limit on yields upside and market more sensitive to a dip than a blip).
Next data: U if M Consumer Sentiment
Addendum: Brief USD blip setup a fresh run to downside… EURUSD testing its 1.1581 August range top. GBPUSD testing 1.3550+. AUD and CAD extending highs. USDJPY lower on the day but still above 158.42-57 support.
USDJPY 4 HOUR: Perfect storm?
Trend: Down Momentum: Long term down, short-term up
If you are bearish on the USD you cannot ask for a more perfect storm: weak jobs report, tame CPI and PPI, Fed rate hikes being priced out, BoJ rate hike being priced in, yet the USD has stayed resilient in the face of it. While talk will be that the BoJ/MoF do not want to see USDJPY back above 160, the key level that would raise alarms is 160.53 = key resistance and also the 61.8% FIBO (and 160.87). Key supports: 158.42-57
Market Update: Forex
USD trading soft but so far with limited follow through as it seems to be following a dip in US yields, specifcally the shorter-end despite CPI coming in as per the consensus. Ranges/key levels are still intact with ones to watch:
- EURUSD 1.1580 (top of range) and 1.,1550 as a market pivoit
- USDJPY 158.42 recent low)
- GBPPUSD 1.3550 (next target)
USDJPY plateaued after its swift pivot above its 200-day EMA reached the 159.30 region earlier this week. Unless US and Japanese officials intervene again to support📉 the yen, the pair could extend its recovery phase, which started at the lower boundary of a bullish📈 channel. Yet, for a more sustainable rally traders may seek a confirmation signal 📈above the psychological 160 level
GBPUSD 4 HOUR: Watch 1.35
Looking to establish 1.3500, which traded today for the 4th day in a row, as support to build momentum for a run at a 1.3550 target.
So far, a 1.3530 double top stands in the way.
Note a softer EURGBP is currently providing some support for GBPUSD while keeping a cap on EURUSD.
GBPCHF (firmer) has been an outperformer, perhaps reflecting some switching in funding currencies from JPY (USDJPY has dipped) to CHF.,
Forex Market Snapshot
The dollar is trading firmer as oil prices and bond yields both rose further overnight.
MOves, however, have been modest despite hopes for the STrait reopening fading and the fallout from the weasker NFP report dissip[ated.
EURUSD is bac trading just below the 1.1540 midpoint of its 1.1500-80 rnage, USDJPY is holding 159+ but wary of a BoJK ambush anmd GBPUSD is pivioting 1.35 afdter trying for a mini breakouit yesterday.
USDJPY 4 HOUR: Path of least resistance
Trend: Down but losing momentum
Momentum: Retracement
Markets follow the path of least resistance and in this case, selling JPY on its crosses run less of a risk of triggering BoJ intervention.
Meanwhile, the BoJ is looking at the same levels on a chart as we are, which in this case there is no key resistance until above 160, likely the level the central bank does not see sustained trading above it.
Only levels worth noting are retracements using
FIBOS for 163.98-155.22 at: :
- 158.57 = 38.2% (completed)
- 159.50 = 50% (open)
- 160.53 = 61.8% (open)
