USDJPY Technical Analysis | Forexlive

USD

The Fed left interest rates unchanged as expected
at the last meeting 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 recent US CPI missed expectations
across the board bringing the expectations for rate cuts forward.
The labour market is starting to show weakness as Continuing
Claims are now rising at a fast pace and the recent NFP report missed across
the board, but yesterday the US Jobless Claims beat forecasts giving the USD a
short-term boost.
The latest 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 US Retail Sales beat
expectations, while the US PPI missed forecasts by a big margin.
The recent Fedspeak has been leaning on
the hawkish side, but last week’s inflation report pretty much confirmed that
the Fed might be done for the cycle.
The market doesn’t expect the Fed to hike anymore.

JPY

The BoJ kept its monetary policy basically
unchanged at the last meeting 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 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

USDJPY Daily

On the daily chart, we can see
that USDJPY sold off from the cycle high at
151.92 following weaker than expected US data last week that pushed Treasury
yields and the US Dollar lower. This week, the pair bounced back and it’s now
near the key 150.00 handle. The bias is now more skewed to the downside as the
moving averages have finally crossed to the downside and the buyers may wait
for the price to come into the trendline around the 146.00 handle where they
will have a much better risk to reward setup.

USDJPY
Technical Analysis – 4 hour Timeframe

USDJPY 4 hour

On the 4 hour chart, we can see that the price is
now near a key resistance zone where we can find the confluence with the 150.00
handle, the daily moving averages, the downward trendline and the 61.8%
Fibonacci retracement level. The sellers are likely to pile in around these
levels with a defined risk above the trendline to position for a drop into the
major trendline. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and position for a rally into
the highs.

USDJPY Technical Analysis –
1 hour Timeframe

USDJPY 1 hour

On the 1 hour chart, we can see that the
bullish trend on this timeframe is beginning to wane as the price broke out of
the minor upward trendline and started to consolidate just beneath the key
resistance. If the price breaks below the most recent swing low around the
148.90 level, the chances for a bearish move will increase and we can expect
the sellers to pile in to target the 146.00 handle.