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USD/JPY ANALYSIS & TALKING POINTS
- BOJ bond shopping for and loans dominate Japanese headlines.
- How a lot impression will the FOMC minutes have?
- Technical evaluation signifies potential draw back to return by way of the rising wedge chart sample.
Really helpful by Warren Venketas
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JAPANESE YEN FUNDAMENTAL BACKDROP
The Japanese Yen discovered some assist this Wednesday morning in opposition to the US greenback whereas the Financial institution of Japan (BOJ) needed to buy 10-year authorities bonds as a result of yield breaching the BOJ’s higher restrict (0.5%) of their coverage band. This has been the second consecutive buying and selling session the place this has taken place and has introduced into query the BOJ’s ultra-loose financial coverage stance as soon as extra.
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Earlier this morning, the Reuters Tankan Index for February (see financial calendar under) improved barely from the January learn; nonetheless, the damaging print does counsel worsening situations inside the manufacturing sector. The BOJ’s Tamura adopted up with some combined messaging stating that unfastened financial coverage is required at current however future coverage adjustments will likely be important in the course of the long run. He went on to quote the sustained menace of inflationary pressures in Japan in addition to elevated wages as a significant contributor from the companies sector. The above might present a hawkish slant to the BOJ’s upcoming assembly leaving room for JPY assist.
JPY ECONOMIC CALENDAR
Supply: DailyFX financial calendar
From a USD perspective, the spotlight for at the moment comes by way of the FOMC minutes and markets will seemingly give attention to board members who most popular a bigger rate of interest hike. The buck might not react extraordinarily favorably contemplating the current rally which has proven indicators of exhaustion. On one other word, geopolitical tensions with US/China and Russia/Ukraine continues to supply sustenance by way of the USD’s safe-haven enchantment.
USD/JPY TECHNICAL ANALYSIS
USD/JPY DAILY CHART
Chart ready by Warren Venketas, IG
Day by day USD/JPY value motion continues to commerce inside the rising wedge chart sample (black) hovering across the psychological 135.00 deal with. Trying on the Relative Energy Index (RSI), there may be nonetheless room for additional upside and a breach above wedge resistance might invalidate the sample. Bears will likely be in search of a break and affirmation shut under wedge assist exposing the 133.63 assist stage.
Key resistance ranges:
- 137.67
- 200-day SMA (blue)
- 135.00
Key assist ranges:
IG CLIENT SENTIMENT BULLISH
IGCS reveals retail merchants are at present web quick on USD/JPY, with 60% of merchants at present holding quick positions (as of this writing). At DailyFX we take a contrarian view on sentiment leading to a short-term upside bias.
Contact and followWarrenon Twitter:@WVenketas
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