USDJPY has had a lively start to August with influences from both respective central banks, trade updates and some key data all causing the pair to make some sharp moves.
On the geopolitical front, confirmation of a better-than-feared US tariff level led to some good relief rallies in the currency as well as across Japanese stock markets, but the bigger moves came from fundamental updates. Both the Bank of Japan and the Federal Reserve Bank kept rates on hold as expected, but a much more hawkish hold from the FOMC led to the pair hitting levels not seen since March, just under 151.00. However, a weaker non-farm payroll report and a sharp revision to the previous month’s data led to a big turn in the dollar, particularly against the Yen, with USDJPY dropping 2.4% from high to low on the day.
Traders are now looking for any fresh geopolitical updates before next week’s key US inflation numbers, but in the current environment, they will be looking to sell the pair on any rallies and even on breaks of support, as the market aggressively prices in a Fed rate cut in September. Initial resistance now comes in on the 200-day moving average near 149.50, with stronger resistance at last week’s highs and the resistance trend line. Support is now sitting on the trendline and recent lows under 147.00, with the longer-term support line around 144.30.
Resistance 2: 150.92 – August High and Trendline Resistance
Resistance 1: 149.48 – 200 Day Moving Average
Support 1: 146.62 – August Low and Trendline Support
Support 2: 144.32 – Long-Term Trendline Support
