USDJPY Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as expected
  with basically no change to the statement.
• Fed Chair Powell stressed once again that they are
  proceeding carefully as the full effects of policy tightening have yet to be
  felt.
• The US CPI report yesterday missed
  expectations across the board sparking a strong dovish repricing and USD
  weakness.
• The labour market is starting to show some weakness
  as Continuing Claims are now rising at a fast pace and the recent NFP report
  missed across the board.
• The US Consumer Confidence and University
  of Michigan Consumer Sentiment continue to fall.
• The recent US ISM Manufacturing PMI missed
  expectations by a big margin, followed by a disappointing ISM Services PMI,
  although the latter remained in expansion.
• The recent Fedspeak has been leaning on
  the hawkish side, but the US CPI data yesterday was basically a declaration
  that the Fed is definitely done.
• The market doesn’t expect the Fed to hike anymore.

JPY

• The BoJ kept its monetary policy basically
  unchanged but formally widened the YCC to 1% on the 10-year JGBs stating that
  it will be a reference cap.
• Governor Ueda repeated once again
  that they won’t hesitate to take easing measures if needed and that they are
  not foreseeing sustainable price increases.
• The recent Japanese CPIshowed that inflationary pressures remain high with
  the core-core reading hovering at the cycle highs.
• The Unemployment Rate remained
  unchanged near cycle lows.
• The Japanese Manufacturing PMI
  matched the prior reading remaining in contraction with the Services PMI
  falling but holding on in expansion.
• The latest Japanese wage data beat
  expectations. As a reminder the BoJ is focusing on wage growth to decide
  whether to tweak its monetary policy.
• The market expects the BoJ to keep
  interest rates unchanged at the next meeting as well.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY managed to retest the 2022 high
at 151.94 before retreating and eventually plummeting following the miss in the
US CPI report. The divergence with the MACD has been going on for a long time.
This is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we have only got pullbacks into the red 21 moving
average, but given the changing outlook around US rates, this might even be the
top.

USDJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that yesterday’s
selloff almost reached the 150.00 handle before pulling back a bit. The price
is now around a key resistance zone where we can find the confluence with the
blue 8 moving average and the 38.2% Fibonacci retracement level. This is where
the sellers are likely to step in with a defined risk above the resistance to
position for another drop into the trendline.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
had another divergence with the MACD right when the price was trading into the
2022 high. The price then broke below the trendline and plunged on the US CPI
release. Right now, we can see that we have also the red 21 moving average for
further confluence at the resistance zone. The buyers will want to see the
price breaking above the resistance to invalidate the bearish setup and
position for a rally back to the highs.

Upcoming Events

Today, we have the US
Retail Sales and PPI data with the market likely giving more importance to the
Retail Sales data. Tomorrow, we will see the latest US Jobless Claims figures
where the market will want to see how fast the labour market is softening. Weak
data is likely to keep the USD under pressure, while strong figures should give
the greenback a bit of relief.