Basic overview
USD:
The US dollar fell across the board yesterday after the release of the US Non-Farm Payrolls (NFP) report. The data wasn’t bad, but it was enough to prompt a slightly cautious repricing in interest rate expectations. The chances of a rate hike in July have fallen to 17% from 30% before the non-farm payrolls report, and the odds of a move in September are now around 50%.
As mentioned earlier, given the Fed’s focus on inflation, the US CPI is likely to be more important. For now, the US dollar is likely to remain under pressure until the release of the US Consumer Price Index scheduled for July 14y.
JPY:
On the Japanese Yen side, the currency jumped higher yesterday early in the European session due to suspected interference. The reason was likely due to speculators unwinding their positions for fear of actual intervention, as Japanese officials said they would stop signaling the risks of intervention in advance and start focusing on targeting speculators with covert interventions.
In the short term, the threat of interventions without early warnings may keep the yen supported, especially after the non-farm payrolls report. Focus has now shifted to the US CPI report which could give the US dollar a boost if the data surprises to the upside or add further pressure on it if the data disappoints.
Technical Analysis of USD/JPY – Daily Time Frame
USD/JPY – Daily
On the daily chart, we can see that USD/JPY Yesterday it fell back to the 160.50 support area. This is where we can expect buyers to pull back with risks identified below the support level to put them in a position to rally to new highs. On the other hand, sellers will want to see the price break down to increase bearish bets in the major uptrend line around the 158.00 handle.
Technical analysis of the USD/JPY pair – 4-hour time frame
USD/JPY – 4 hours
On the 4-hour chart, we can see that price action has become range-bound at support as bearish buyers started to accumulate. There is not much we can take away from this time frame as buyers will continue to move around support to target new highs, while sellers will wait for a lower breakout to increase bearish bets to new lows.
Technical Analysis of USD/JPY – 1 hour time frame
USD/JPY – 1 hour
On the 1-hour chart, we can more clearly see the price action in a limited range with the 161.50 area now acting as resistance. Market participants are likely to continue range trading until we get a breakout on both sides. Red lines define Average daily range For today.
