Near-term structure remains bullish on expectations for aggressive Fed
The USDJPY regained traction and edged higher in late Asian / early European trading on Thursday, after being hit by talks of possible BoJ intervention to support weakening yen, as immediate threats of intervention started to fade, on comments that Japan’s solo action won’t be that effective.
Weak data from Japan, released today, showed surging imports in August and record trade deficit, mainly on high energy costs that added pressure on yen.
On the other side, dollar received fresh support from revived expectations that Fed will deliver another 75 basis points hike next week, following hotter than expected Aug inflation, with 70% of economists expecting such outcome of the policy meeting, but now 30% expect that Fed would be even more aggressive and opt for a 100 basis points increase.
Near-term action remains within a consolidation range between the multi-year top at 144.99 and 141.54 (Fibo 23.6% of 130.39/144.99 rally) with daily studies being in bullish configuration and maintaining positive bias.
Rising 10DMA (currently at 142.77) contained recent dips and marking initial support which should keep the downside protected and guard pivotal support at 141.54 (range floor) for renewed attack at key 144.99 barrier, break of which would open way for fresh advance and expose 1998 peak at 147.68.
The action is likely to remain in extended consolidation until next week’s Fed decision which is expected to provide strong direction signal.
Res: 143.80; 144.11; 144.55; 144.99
Sup: 142.77; 142.00; 141.54; 141.02