USDJPY TECHS: Bullish Price Action
- RES 4: 139.07 Bull channel top drawn from the Mar 4 low
- RES 3: 138.56 1.618 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 2: 137.30 1.50 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 1: 137.00 High Jun 29
- PRICE: 136.61 @ 16:48 BST Jun 29
- SUP 1: 134.27 Low Jun 23
- SUP 2: 133.85/131.50 20-day EMA / Low Jun 16 and key support
- SUP 3: 131.29 Bull channel base drawn from the Mar 4 low
- SUP 4: 130.00 Round number support
USDJPY firmed further Wednesday, printing fresh cycle highs and the best levels since 1998. The move resumes the primary uptrend and maintains the sequence of higher highs and higher lows. This shifts focus to 137.30, the 1.50 proj of the Feb 24 - Mar 28 - 31 price swing. Markets will remain on watch for any signs of overbought conditions, but with the RSI still sub-70 there’s little sign the pair is running out of momentum at current levels. Key short-term support is unchanged at 131.50.
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USDJPY TECHS: Monitoring The 50-Day EMA
- RES 4: 132.39 High Apr 15 2002
- RES 3: 131.96 1.00 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 2: 129.78/131.35 High May 17 / High May 9 and the bull trigger
- RES 1: 128.12 20-day EMA
- PRICE: 127.73 @ 14:57 BST May 30
- SUP 1: 126.36 Low May 24
- SUP 2: 126.00 50-day EMA
- SUP 3: 125.09 Low Apr 14
- SUP 4: 124.01 Low Apr 11
USDJPY is unchanged. The pair traded lower Tuesday and breached support at 126.95, Apr 27 low. This level marked an important short-term pivot support and the break suggests scope for a continuation lower. A move down is still considered a correction though and is allowing a recent overbought condition to unwind. Attention is on the 50-day EMA, at 126.00. Initial firm resistance has been defined at 129.78, May 17 high.
US: New Zealand PM Ardern To Meet President Biden At White House Tomorrow
US President Joe Biden will welcome New Zealand Prime Minister Jacinda Ardern to the White House for the first visit of a leader from New Zealand since 2014.
- According to the White House: ‘The two Leaders will discuss strengthening cooperation to support the Pacific Islands region, and our work together on a range of issues, including the Indo-Pacific Economic Framework, addressing the climate crisis, and countering terrorism and radicalization to violence both off and online.’
- Ardern said she expects to discuss increasing competition in the Indo-Pacific, trade, and the US economic role in the region.
- It is understood that gun control may also be on the agenda. Ardern oversaw the implementation of gun control measures in NZ after a mass shooting in Christchurch in 2019.
- Auckland was one of the first 12 signatories to the new US Indo-Pacific Economic Framework unveiled by President Biden in Tokyo last week.
CANADA: BofA Maintain Aggressive Rate Call, Support For CAD
- BofA continue to expect the BoC to hike 50bp in June and in July, and then in 25bp clips at each meeting to reach a terminal rate of 3.50% in April 2023, above the neutral 2-3% range.
- A number of factors support this, including a forecast for the economy to grow over 4% this year, continued inflation pressures, the fact that house prices keep increasing and are at high levels compared with other countries, along with a tight labor market.
- A 50bp hike is fully priced in, which they see "as providing a cheap option to pay for a surprise 75bp", with the recent above-consensus inflation opening the door to this possibility but a very low probability.
- Rates: "The market continues to perceive this hiking cycle as front-loaded and subject to reversal as the business cycle matures. We see growing risks of a Fed pause later this year which might help lower US rates relative to CAD rates, but would likely lead to a global rates rally if it transpires".
- FX: The prior push above 1.30 in USDCAD was driven by higher risk aversion and a softening in energy prices. "However, it has since moved below 1.28, and has been consistent with our overall modestly positive CAD outlook, with a year-end forecast still at 1.23. The BoC rate hikes should prove further supportive for the currency, in our view."
