Fx Update: Near-Term Bullish Usdjpy Bias Pre-Boj Rate Decision

The second half of the first trading week of September is packed with several explosive calendar event risks, all set to ignite the trading ranges such as the EURUSD which have been rather subdued in August, even with the holiday adjustment.

Central Bank glut
Thursday will see a triple crown event on the central bank agenda, with Bank of England and European Central Bank rate announcements following Bank of Japan in the late Asian hours. Friday's US non-farm payrolls will see the culmination of this week's risk events, as this is the last big employment report ahead of the Federal Reserve's much anticipated September rate setting meeting.

With the BoJ event first in line, we provide a technical snapshot of the key yen-pair, USDJPY: The broad consensus is for the Japanese benchmark rates to remain unchanged at the near-zero bound rate of 0.1 percent. While both the Japanese inflation outlook as well as hard economic data have shown gradual signs of improvement, given both the jitters over the expected tapering of quantitative easing, as well as generally fragile global risk conditions, BoJ is unlikely to show any signs of deviating from its currently accommodative monetary policy.

The broad price action in yen-pairs, as can be seen in the second chart that depicts Singaporean, UK, Australian and US currencies against yen, has for the past week been yen-negative, and barring any big surprises tomorrow, we would look for this price trend to remain in place in the near-time horizon. Below, we visit the main yen pair for a more detailed technical outlook.

USDJPY bullish again
The USDJPY is making a daily close above the trendline resistance coming in from May and yesterday's closing above the daily cloud, has put the short-term bullish bias back in USDJPY. But for this to remain the case on an intraweek basis, it is imperative that USDJPY remains above the cloud, presently at 99.25.

For any further upside acceleration and for the upside continuation pattern to follow-through, a close above the 99.96 level (almost coinciding with the 100.00 psychological level) is needed, which would give scope for a test of 100.87 (higher low from July 19) and further out 101.53 (higher low from July 6) on the short-term horizon.

USDJPY trading above key trendline resistance

Source: Saxo Bank

Broad based buying in yen-pairs