USDJPY towards 154 or 166?
Current Situation
USD/JPY is holding at elevated levels near 161.00 during Asian trading on Tuesday. The high-risk sentiment, driven by expectations of a Fed rate cut, contributes to the pair's latest increase. All eyes are on Fed Chair Powell’s testimony for further indications on monetary policy.
Recent Data and Technical Indicators
Daily Chart: On Wednesday, July 3, USD/JPY posted a bearish Hanging Man candlestick pattern, followed by a bearish down day, confirming the bearish sentiment.
Support and Resistance:
Support: The pair found support at the April 29 high of 160.32, forming a price gap indicating potential exhaustion.
Resistance: It is currently trading against resistance from the 50-period Simple Moving Average (SMA).
Key Factors
Fed Rate Cut Expectations: Speculation about a possible rate cut by the Federal Reserve in September has increased, with the CME’s FedWatch tool indicating a 76.2% probability, up from 65.5% the previous week.
Powell’s Testimony: Market participants are awaiting Fed Chair Jerome Powell’s testimony on the Semiannual Monetary Policy Report to the US Congress for further insights into future policy direction.
Japanese Yen Weakness: The JPY is extending losses due to foreign asset purchases by Japanese individuals under the Nippon Individual Savings Account (NISA) program and concerns over potential intervention by Japanese authorities in the FX markets.
US Treasury Yields: Rising speculation about a Fed rate cut is putting pressure on US Treasury yields, which could limit the upside for the US Dollar.
Market Sentiment and Projections
Short-term Trend: USD/JPY remains in a short-term downtrend. However, given the exhaustion gap and the strong medium to long-term uptrend, there is a risk the pair could continue recovering.
Potential Targets:
Upside: If the pair surpasses 161.40, it would be a bullish signal, with further gains potentially reaching 162.90.
Downside: A break below 160.20 would confirm further downside towards a probable target of 158.50.
USD/JPY is holding at elevated levels near 161.00 during Asian trading on Tuesday. The high-risk sentiment, driven by expectations of a Fed rate cut, contributes to the pair's latest increase. All eyes are on Fed Chair Powell’s testimony for further indications on monetary policy.
Recent Data and Technical Indicators
Daily Chart: On Wednesday, July 3, USD/JPY posted a bearish Hanging Man candlestick pattern, followed by a bearish down day, confirming the bearish sentiment.
Support and Resistance:
Support: The pair found support at the April 29 high of 160.32, forming a price gap indicating potential exhaustion.
Resistance: It is currently trading against resistance from the 50-period Simple Moving Average (SMA).
Key Factors
Fed Rate Cut Expectations: Speculation about a possible rate cut by the Federal Reserve in September has increased, with the CME’s FedWatch tool indicating a 76.2% probability, up from 65.5% the previous week.
Powell’s Testimony: Market participants are awaiting Fed Chair Jerome Powell’s testimony on the Semiannual Monetary Policy Report to the US Congress for further insights into future policy direction.
Japanese Yen Weakness: The JPY is extending losses due to foreign asset purchases by Japanese individuals under the Nippon Individual Savings Account (NISA) program and concerns over potential intervention by Japanese authorities in the FX markets.
US Treasury Yields: Rising speculation about a Fed rate cut is putting pressure on US Treasury yields, which could limit the upside for the US Dollar.
Market Sentiment and Projections
Short-term Trend: USD/JPY remains in a short-term downtrend. However, given the exhaustion gap and the strong medium to long-term uptrend, there is a risk the pair could continue recovering.
Potential Targets:
Upside: If the pair surpasses 161.40, it would be a bullish signal, with further gains potentially reaching 162.90.
Downside: A break below 160.20 would confirm further downside towards a probable target of 158.50.
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