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USD/JPY Fundamental Overview and Trading Signal - November 14, 2023

Yen Traders Eye US Inflation Data Amid Intervention Warnings

Fundamental Outlook:

The USD/JPY pair remains teetering on the brink of significant volatility as market participants await the upcoming U.S. inflation data. The anticipation is for the data to either confirm or adjust the existing narrative of peaking global interest rates.

A higher-than-expected Consumer Price Index (CPI) could exacerbate the current yield differential between the U.S. and Japan, potentially sending the yen to new depths.

Minister Shunichi Suzuki

Japanese Finance Minister Shunichi Suzuki has not been reticent, signaling that the government stands ready to counter excessive volatility, a stance that may temper aggressive positions against the yen.


USD/JPY Technical Analysis and Trading Signal:

As of the latest trading session, the USD/JPY pair approached the critical level of 151.95, a threshold that historically prompted government intervention.

USDJPY Bar chart showing forex and commodities prices, green/red candles depict daily trading trends. Includes moving average, Bollinger bands, and RSI.

The pair is currently trading within a bullish Bollinger Band structure, with the RSI indicating a strong momentum that could either lead to an extension of the uptrend or precede a corrective pullback.

  • Trade Direction: Bearish (with caution)

  • Trade Probability: 65%

  • Yesterday's Trend: Bullish

  • Pivot Point: 151.95

Indicators Overview:

  • Volatility: Increasing, as seen in the widening Bollinger Bands.

  • Moving Average: Price is above the Ichimoku cloud and the MA, indicating a bullish trend.

  • Ichimoku: The price remains above the cloud, suggesting bullish momentum.

  • RSI: Elevated, signaling potential overbought conditions.

  • Bollinger Bands: Price nearing the upper band, could indicate a potential pullback.

🎯 Trading Targets:

  • Buy: Targets at 1st Resistance (152.50), 2nd Resistance (153.00), and 3rd Resistance (153.50).

  • Sell: If the bearish scenario unfolds, targets at 1st Support (151.00), 2nd Support (150.50), and 3rd Support (150.00).

❌ Stop Loss Guidelines:

  • Buy: Set the stop loss below the recent swing low or at the 1st Support level.

  • Sell: Set the stop loss above the recent swing high or at the 1st Resistance level.

Conclusion and Action Steps:

In light of the imminent U.S. inflation data release and Japan's intervention warnings, traders should prepare for increased market volatility for the USD/JPY pair.

The current technical setup favours the bulls, but the fundamental backdrop and intervention risks suggest a cautious approach. Consider placing trades with tight stop losses and be ready to adjust positions swiftly in response to the actual CPI data and potential Japanese government actions.

Trade of the Day: Monitor the USD/JPY pair closely upon the CPI release, ready to engage in a short position should the pair breach the pivotal 151.95 level, indicating potential for intervention and a quick reversal.

As with all investments, your capital is at risk. Investments can fall and rise and you

may get back less than you invested.

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