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Fundamentals

During the Asian session on Tuesday (June 27th), USDJPY fluctuated in a narrow range to the upside and is currently trading around 143.5. The overall volatility of the market yesterday was relatively large, mainly following the US dollar index, with a range of 142.9-143.7 and an amplitude of 0.8. However, USDJPY failed to break above the previous day's high of 143.8 and eventually closed the Doji Star high. Traders need to be wary of USDJPY's arc top status.

Overall: For one thing, US officials have been reinforcing their expectations of interest rate hikes this year, but there are still many problems. The job market has exposed the risk of rising interest rates and could usher in a "boiled frog"-style recession. Continued tightening caused by persistent inflation will lead to a synchronized global downturn. Another risk of the banking system or other risks would exacerbate the market's trading against recession and accelerate the dollar's decline.

For another, the exchange rate for the yen has come to around 145 once again, which was also the point of monetary intervention by the Bank of Japan last year. For now, BOJ officials are still stuck in verbal intervention which is familiar last year. Shunichi Suzuki, Japanese Finance Minister, said on Monday that he would continue to pay close attention to the foreign exchange market and take appropriate measures in case of excessive market volatility. On the same day, Masato Kanda, Japan's vice minister of finance, said that the recent fluctuations in the yen have been very rapid and one-sided, and the government does not rule out any choice, "We are willing to pay close attention to a strong sense of urgency and appropriately deal with excessive fluctuation."

Currently, USDJPY has fallen to the range of 143.5-143.9, reflecting the real effective exchange rate of the comprehensive external purchasing power of the yen, which has fallen to the lowest level in history after Japan changed to a floating exchange rate system. However, the governor of the Bank of Japan remains in place, repeatedly saying that he will patiently continue to implement loose monetary policy. This contrasts sharply with other central banks, further weakening the prospects for a rally in the yen. However, according to the current position of the exchange rate, traders should be bullish rather than go long, the odds are lower but the risks are greater.

Technical Analysis

Trading at the daily timeframe, as USDJPY breaks the upper limit of the symmetry triangle, more upside is opened. However, USDJPY has broken through the key technical resistance (142.50), which is the 61.8% Fibonacci retracement level and a resistance area consisting of previous highs. At present, USDJPY has also established itself in this position and further may hit the 145 high. If the exchange rate is blocked and retraced, the initial support is around 142.50, which is the support area turned into after the previous resistance was broken. Conversely, if it loses again, the decline will extend to around 138.60.

Trading Recommendations

Trading Direction: Short

Entry Price: 143.500

Target Price: 141.500

Stop Loss: 144.000

Support: 142.500/140.500

Resistance: 145.000/152.000