FX Daily Strategy: Asia, Sep 9
Empty Calendar Sees Focus Back to Geopolitics/Fed
152.10 January low Targeted for USD/JPY
AUD/USD Could Break May High
Wednesday's Economic calendar is pretty clear with tier two data except ECB speech throughout the day. While it could be a consoilidation day, market focus will return to Middle East geopolitics and Fed rate expectation. There has been little development in the Middle East after Iran announced retaliation. One could expect their continuous harassment of the Strait of Hormuz to keep U.S. busy while the U.S. will bring on maximum pressure, mostly secondary economic sanctions with occasional selective military operation to neutralize Iran's harassing capability. It seems unlikely the U.S. will launch another large scale military operation and we will have to see how impactful U.S. navy escort is, towards the oil flow.
Triggered by expectation of a September hike from the BoJ, USD/JPY is seeing a fast break lower in the past week. The latest move sees the pair as low as an inch below the 153 figure. However, it is worth mentioning that we still do not have official "leaks" from the BoJ on the coming hike. The front running moves could see a partial U-turn if market participants are being startled by a headline.
On the chart, consolidation above the 155.22/155.00 support has given way to break to exend sharp losses from the 160.00/160.50 area. Break here confirm a top in place at the 164.00 July high and suggest room for further losses to retrace rally from the April 2025 year low. Losses through the 154.00 congestion see room to 153.00 next but potential is seen for extension to retest the 152.10, January current year low, then 152.00, 50% Fibonacci level. Meanwhile, resistance is lowered to the 155.00/155.22 lows of May and August which should now cap and sustain losses from the 160.00/160.50 resistance.
On the chart, the pair is edging higher with break above the .7200 level extending gains from the .6865, June low. Positive daily studies keep pressure on the upside and suggest scope to retest the .7278, May current year high. Would expect reaction here as daily studies extend into overbought areas. A later break here will extend the bullish gains from the low of April 2025 to further retrace losses from the 2021 year high. Meanwhile, support remains at the .7150/.7121 congestion and low of last week is expected to underpin. Below here will open up room for deeper correction towards strong support at the .7100/.7080 area.