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 US Core PCE last
  week came in line with forecasts with the disinflationary progress continuing
  steady.
• 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.
• The ISM Manufacturing
  PMI
  last week missed expectations falling further into contraction.
• The recent US Consumer
  Confidence report beat expectations although the
  details about the labour market continued to weaken.
• The hawkish Fed members recently shifted
  their stance to a more neutral position.
• The market expects the Fed to start cutting rates
  as soon as Q1 2024.

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 inflation pressures are
  easing although they remain well above the BoJ’s 2% target.
• The latest Unemployment Rate remained unchanged near cycle lows.
• The Japanese Manufacturing PMI fell further into contraction but
  the Services PMI ticked higher remaining in expansion.
• The latest Japanese wage data beat expectations and as a reminder
  the BoJ is focusing on wage growth to decide whether to tweak its monetary
  policy.
• The market expects the BoJ to hike
  rates in Q2 2024.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY dropped into the key trendline around
the 146.50 level after testing probably for the last time in this cycle the
high at 151.92. The bias remains bearish as the price has been printing lower
lows and lower highs with the moving averages now
being crossed to the downside. The sellers will need the price to break below
the key 145.00 handle though to confirm the reversal and start targeting the
127.00 handle with more conviction.

USDJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD right at
the key trendline. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. This might be a bad omen for the sellers in
the short term as it might be a sign that the pair could correct higher, if not
completely reverse the trend. The buyers are likely to pile in around this
trendline to target a breakout to the upside of the falling wedge and
increase the bullish bets into the 150.00 handle.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that at
the moment, the buyers are leaning on all the support levels to position for a
rally into new highs. The first target should be the resistance zone
around the 147.50 level where we can find the confluence with
the downward trendline and the 61.8% Fibonacci
retracement level. That’s where the sellers will
likely pile in with a defined risk above the trendline to position for a drop
into the lows and target a breakout to the downside.

Upcoming Events

This week we will see lots of US labour
market data culminating with the NFP release on Friday. Today, we have the ISM
Services PMI and the US Job Openings reports. Tomorrow, we will get the US ADP
data. On Thursday, it will be the time for the US Jobless Claims figures, while
on Friday we conclude the week with the Japanese Wage data and the NFP report.

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