USD/JPY Fundamental Outlook

The U.S dollar rose on last Tuesday, making it the 4th time of successive trading sessions. The currency hit its best trading points since July 10, with an increase of 0.52%. This increase was propelled by the US Treasury yields, which hit a 4% 10 year growth. 

The US economic published recently which showed a good Q2 GDP and low unemployment rates convinced traders that the country will evade recession in 2023, and perhaps 2024. This means a higher policy and hike rates, particularly if the increase in demand stops inflation from hitting the 2.0% mark. 

However, this Friday will see the release of more data which will provide a wider perspective. The data release shows that 200,000 workers were added last month, this is followed by an increase of 205,000 positions in June. 

However, if new reports shows NPF hitting a 300,000 figure, this means USD will be bullish, thereby triggering more hawkish rates. 

In order words, if NPF reports hits below the 150,000 figure, it would trigger a bearish trend with the USD. Traders will conclude on the July FOMC increase being the last tightening. This outcome will benefit currencies like the euro, yen, and pound. 

USD/JPY Technical Analysis

The pair traded bullish on Tuesday, it hit a new high in the last four weeks. With the USD becoming stable, the pair is predicted to continue it's upward trend.

The Bank of Japan currently concluded on adjusting it's yield curve control program. However, the strength JPY gained from this was short-lived, as markets confirmed that the central bank has not changed it's ultra-loose outlook. 

The next technical resistance is rumoured to be around 145.14. When a bullish trend occurs,  this bullish trend can project further, creating a new resistance of 148.85.

However, if sellers take over the market triggering a bearish trend, the first support will be at 142.40, and subsequently 141.00. However, when a further decline occurs, support will be at 138.30.

CAD/USD

The Canadian dollar been on a bearish trend since the middle of July. Even with the increase of crude oil, the currency has weakened against the USD.

With the increase of crude oil, has greatly neutralized the profits of the USD. Especially, since the BoC concluded not to tighten monetary policy in the last meeting held. After the increase if rates by 25bos in July,  the BoC has reached a stance not to further tighten rates. 

With global inflation gradually declining, the Canadian inflation isn't left out, the BoC is at the end of their hiking cycle. However, traders are starting to deliberate on potential rate cuts, they are still looking forward to Canadian fundamental data to remove every doubts in rate hikes. 

GBP/USD

The possibility of a little rate hike at the Bank of England's meeting held on Thursday is high, especially as the UK price pressures seems to be declining from high levels to moderate levels. 

With inflation still above the BOE's target range, it to early tell the irrespective of the low data report of the UK June CPI. High inflation and major increase in wage from May, showing a 25bps,  instead of a 50bps.

GBP could struggle to maintain its bullish trend, especially with data showing a bearish momentum with underlying price tensions. 

The pair has been trading above a strong uptrend line from the end if June till date. However, the momentum is weak to move below the support level. If that happens, a new low of 1.2600 will be formed. 

The price is bullish, with air hitting its one year high in May, which ensured the double top, double bottom chart pattern since late 2022. This means there is a probability for moderate profits. However, there needs to be a soft price reversal for the higher bullish trend to occur.