8th April 2023 Trade view on USDJPY
Fundamental analysis by CHATGPT 4
with Weekly FX Market Recap: Apr. 3 – 7, 2023 (By Pippo)
After digesting Pippo Weekly FX Market Recap: Apr. 3 – 7, 2023, the fundamental sentiment expressed by ChatGPT-4 is as follows:
Based on the provided news and economic updates, the major currencies can be ranked as follows for the coming week, from strongest to weakest:
- Swiss Franc (CHF)
- U.S. Dollar (USD)
- Euro (EUR)
- Japanese Yen (JPY)
- Canadian Dollar (CAD)
- British Pound (GBP)
- New Zealand Dollar (NZD)
- Australian Dollar (AUD)
Please note that this ranking is based on the information available in the question and is not guaranteed to be accurate. Markets can be influenced by a variety of factors, and it is essential to stay up-to-date with the latest news and economic indicators to make informed decisions.
The main rationale for USD/JPY being largely bullish is based on a combination of factors that include central bank policy, economic data, and risk sentiment.
- Central bank policy divergence: The Federal Reserve has been on a monetary tightening path, raising interest rates and signaling further increases to combat inflation. On the other hand, the Bank of Japan has maintained a very accommodative monetary policy with low or negative interest rates. This policy divergence can lead to a stronger USD as investors look for higher yields and return on investment.
- Economic data: The U.S. economy has shown relatively strong growth and employment data compared to Japan. Positive economic data can support a stronger USD as it indicates a healthier economy and can influence the Fed’s decisions on further rate hikes. On the other hand, weaker Japanese economic data can put pressure on the JPY, as it signals the need for continued accommodative monetary policy from the Bank of Japan.
- Risk sentiment: The USD is often seen as a safe-haven currency during times of global economic uncertainty or geopolitical tensions. If market participants become more risk-averse, they may seek the safety of the USD, leading to increased demand and a stronger USD/JPY. While the JPY is also considered a safe-haven currency, its low or negative interest rates make it less attractive than the USD in such situations.
In summary, the combination of policy divergence, economic data, and risk sentiment creates an environment where the USD/JPY could be largely bullish. However, it is important to note that these factors can change over time, and unexpected events or shifts in market sentiment can impact the currency pair’s performance.
The mixed labor market data from Thursday and Friday can have an impact on the USDJPY currency pair. While the increase in U.S. job cuts in March (89.7K) compared to February (77.77K) and February 2022 (21.38K) suggests a weakening labor market, the Friday news paints a somewhat more optimistic picture.
The U.S. Non-farm payrolls change for March came in at 236K, slightly below the forecast of 238K, but the February reading was upwardly revised to 326K. Additionally, the unemployment rate ticked lower to 3.5% from 3.6%, and average hourly earnings rose to 0.3%.
Given the mixed labor market data, the impact on USDJPY expectations can be complex. On one hand, the increase in job cuts could lead to concerns about the U.S. labor market, which might weigh on the U.S. dollar and result in a bearish outlook for USDJPY. However, the positive Non-farm payrolls report, the lower unemployment rate, and the increase in average hourly earnings suggest that the labor market remains relatively strong, which could support the U.S. dollar and lead to a bullish outlook for USDJPY.
Considering both sets of data, market participants may adopt a cautious stance and await further economic indicators to confirm the overall trend in the U.S. labor market. In the short term, the USDJPY currency pair may experience heightened volatility as investors digest the mixed news and adjust their expectations accordingly.
According to swing theory, a trend reversal technically occurred when the price breached the 133.100 level. After surpassing this swing high resistance level, the price corrected and retraced to 130.500. The current week’s closing price is around the average level of the past three weeks’ candlesticks, making it difficult to discern a clear bullish or bearish sentiment from a technical perspective. However, the H4 candlestick has been forming higher highs since Thursday, indicating immediate bullish momentum for USDJPY.
In the upcoming week, if the price surpasses the swing high resistance level (133.100) a second time, it should be on track to reach the 50% target projection level (134.600). As long as the swing low level (129.600) is not breached, USDJPY remains bullish.
Also Strong Weak analysis by Profile - Dennis3450 - BabyPips.com Forum suggests USD appears to be bottoming out.
In summary, the combination of fundamental analysis, technical analysis, and currency strength analysis presents an overall BULLISH outlook.
