. JPY/USD: Latest Market Update and Analysis - 17 March 2023

JPY/USD: LATEST MARKET UPDATE AND TECHNICAL ANALYSIS – 17 MARCH 2023

JPY/USD: LATEST MARKET UPDATE AND TECHNICAL ANALYSIS – 17 MARCH 2023

17 Mar 2023

With concerns of a banking crisis, USD/JPY recovers from its daily low and remains in negative territory at 133.00

FUNDAMENTAL OVERVIEW

  • Fresh selling around the USD/JPY pair is prompted by several reasons on Friday.
  • The dollar is under pressure due to expectations for a less aggressive Fed and declining US bond yields.
  • Bankruptcies help the safe-haven Yen and aid in the intraday decline.
  • The dovish view of the BoJ may limit JPY gains and boost the major.

The USD/JPY pair fails to capitalize on the previous day’s solid recovery of over 200 pips from its lowest level since February 14 and comes under some renewed selling pressure on Friday. The pair, however, manages to rebound a few pips from the daily low touched during the early European session and now trades above the 133.00 mark, still down nearly 0.40% for the day.

Growing acceptance that the Federal Reserve will adopt a less hawkish stance at its upcoming meeting on March 21-22 exerts fresh downward pressure on the US Dollar, which, in turn, is seen weighing on the USD/JPY pair. In fact, the markets are now pricing in a greater chance of a smaller 25 bps lift-off in the wake of last week’s collapse of two mid-size US banks – Silicon Valley Bank and Signature Bank. This leads to a fresh leg down in the US Treasury bond yields and continues to undermine the Greenback.

Apart from this, the global flight to safety benefits the Japanese Yen (JPY) and further contributes to the offered tone around the USD/JPY pair. Despite multi-billion-dollar lifelines for troubled banks in the US and Europe, investors are still trying to determine whether the risk of a full-blown global banking crisis has been tamed and remain concerned about widespread contagion. This, along with looming recession fears, takes its toll on the risk sentiment, which is evident from a softer tone around the equity markets.

That said, a more dovish stance adopted by the Bank of Japan (BoJ) should keep a lid on any further gains for the JPY and help limit losses for the USD/JPY pair, at least for the time being. In fact, the outgoing BoJ Governor Haruhiko Kuroda said earlier this Friday that there is room to cut interest rates further into negative territory from the current -0.1%. This, in turn, warrants some caution for aggressive bearish traders and positioning for an extension of the recent downward trajectory witnessed over the past two weeks or so.

USD/JPY TECHNICAL ANALYSIS DAILY CHART:

Technical Overview

USDJPY is currently started trading in down channel.

USDJPY is currently trading below all SMA.

RSI is in buying zone which suggests bullishness and Stochastic is suggesting down trend.

USDJPY resistance is at 133.151 & its immediate support level is 132.174

HOW TO TRADE USD/JPY

USD/JPY is trading in a down channel; currently it is trading at important support zone, if it breaks it and hold it below then, we can see further downside. 

TRADE SUGGESTION- SELL AT 132.880, TAKE PROFIT AT 131.701, SL AT 133.784