#USDJPY @ 132.575 pares the biggest daily gains in two months even as US Dollar, yields grind higher. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• USD/JPY pares the biggest daily gains in two months even as US Dollar, yields grind higher.
• Japan PM pushes for global wages at home, gives rises to hawkish hopes for BoJ.
• German, Tokyo inflation can entertain traders ahead of Fed’s preferred inflation gauge.
• Fears of higher inflation, geopolitics join mixed data to propel yields amid quarter-end consolidation.

The pair currently trades last at 132.575.

The previous day high was 132.89 while the previous day low was 130.76. The daily 38.2% Fib levels comes at 132.08, expected to provide support. Similarly, the daily 61.8% fib level is at 131.57, expected to provide support.

USD/JPY prints mild losses around 132.60 heading into Thursday’s European session. In doing so, the Yen pair struggles to respect the upbeat US Dollar and Treasury bond yields amid mixed concerns about the Bank of Japan’s (BoJ) next move. Also weighing on the major currency pair are the talks of Japanese credit rating and the Federal Reserve (Fed) officials’ cautious optimism. It should be noted, however, that the geopolitical fears surrounding Russia, North Korea and China weigh on the market’s sentiment and allow the Yen to cheer its traditional haven status after rising heavily the previous day.

BoJ policymakers, including the outgoing Governor Haruhiko Kuroda, advocate for an easy money policy but the latest wage accord and Prime Minister Fumio Kishida’s readiness for higher wages can challenge the ultra-loose policies. Recently, global rating agency Fitch Ratings affirmed Japan’s sovereign credit rating at ‘A’ while maintaining a ‘stable’ outlook. “Base case remains that BoJ will maintain its loose monetary policy over the medium term,” said Fitch.

Elsewhere, Fed Chair Jerome Powell’s teasing of one more rate hike joined Fed Vice Chair for Supervision Michael Barr’s emphasis on data dependency to test the market’s previous optimism. On the same line could be Fed Chair Powell’s push for alteration in deposit insurance. As a result, the Fed hawks do flex their muscles but wait for more clues and amplify the market’s anxiety ahead of Friday’s key inflation gauge from the US, namely the Core Personal Consumption Expenditure (PCE) Price Index.

It should be observed that China Premier Li Qiang’s dislike for trade protectionism and decoupling, which indirectly targets the US, joined the North Korean and Russian tactics over nuclear power to sour the sentiment.

On a different page, the majority of the central bankers defend their previous bias about inflation and hence propel yields amid economic fears. Furthermore, International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said on Thursday, “Urgently need faster, more efficient mechanisms for providing debt support to vulnerable countries.” Her comments renew banking fears which eased previously.

Amid these plays, the S&P 500 Futures struggled around a one-week high marked the previous day, while ignoring Wall Street’s upbeat performance, whereas the US 10-year and two-year Treasury bond yields grind higher after teasing the bond buyers the previous day.

Moving forward, the US fourth quarter (Q4) Core Personal Consumption Expenditure (PCE) and final prints of the Q4 Gross Domestic Product (GDP) can entertain Yen pair traders. However, major attention should be given to Friday’s Tokyo inflation data and the Fed’s preferred inflation gauge, namely the US Core PCE Price Index.

Failure to provide a daily close beyond 50-DMA, around 132.90 by the press time, directs USD/JPY bears towards a 10-week-old ascending support line, close to 130.80 at the latest.

Technical Levels: Supports and Resistances

USDJPY currently trading at 132.56 at the time of writing. Pair opened at 132.86 and is trading with a change of -0.23% % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 133.62, 50 SMA 132.8, 100 SMA @ 134.02 and 200 SMA @ 137.34.

The previous day high was 132.89 while the previous day low was 130.76. The daily 38.2% Fib levels comes at 132.08, expected to provide support. Similarly, the daily 61.8% fib level is at 131.57, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 131.45, 130.04, 129.32
• Pivot resistance is noted at 133.58, 134.3, 135.71

[/s2If]
Join Our Telegram Group