Interest rate hike ending? Dollar selling strategy!
◎ Dollar Selling Strategy
1) USD/JPY Sell Strategy
USD/JPY 108.50 yen SELL entry
109.50 yen Stop
105.10 yen Limit
2) Fundamentals Analysis
・ At the start of the year, there is a tendency to sell the dollar
・ Decreased likelihood of rate hikes
・ Expectation that rate hikes will end
・ Expectation of rate cuts
・ President Trump
・ Budget proposal and parts of the government shut down
The employment data released last week showed strong results, but December employment is thought to reflect year-end shopping. Despite the strength, gains were limited and couldn't break above 108.50 yen.
Conversely, the ISM Manufacturing PMI came in weaker than expected. This marks the weakest point since June 2017. It had been rising sturdily, but the September 2018 peak of 61.3 has weakened.
ISM is a leading index, reflecting future economic outlook. A lower index suggests growing concern about the future economy.
President Trump is clashing with Congress over funding to build a wall on the border with Mexico. As a result, some government agencies have shut down since late last year, and Trump has stated that shutdowns may continue for longer.
3) Technical Analysis
USD/JPY Weekly Chart
USD/JPY Timeframe Chart
Looking at the weekly chart for USD/JPY, the downside from last week’s flash crash is stopping near last year’s low. The last year’s low was also reached due to the down move from the start of the year. This decline may be seen as part of a move toward new lows. The key levels to watch are resistance around 114.20, support around 108.50, and a floor near 104.60.
On the intraday chart, breaking below 108.50 appears to be the start of the flash crash. If the price breaks the support line, it may turn into resistance. It looks like a converging triangle formed by the 108.50 resistance line and the rebound line after the drop.
Additionally, a converging triangle formed by the original downtrend line and the rebound line after the drop is present.
If the 108.50 resistance holds, consider a short entry; if the price breaks above the convergence triangle of the downtrend and rebound lines, place a stop; place a target around last year’s low.
4) Dollar Index
The Dollar Index, which gauges the dollar’s level as an index, has been sloping downward since mid-December. Upside momentum is becoming heavier. It seems pivotal whether it breaks below 95. I will also keep an eye on this.
