USDJPY Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as
  expected while dropping the tightening bias in the statement but adding a
  slight pushback against a March rate
  cut.
• Fed Chair Powell stressed
  that they want to see more evidence of inflation falling back to target and
  that a rate cut in March is not their base case.
• The US CPI beat
  expectations for the second consecutive month with the disinflationary trend
  reversing.
• The US PPI beat
  expectations across the board by a big margin.
• The US Initial Claims beat
  expectations while Continuing Claims missed. Overall, the data remains steady.
• The ISM Manufacturing
  PMI
  surprised to the upside with the new orders index, which is considered a
  leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat
  expectations across the board with the employment sub-index erasing the prior
  drop and prices paid jumping above 60.
• The US Retail Sales missed
  expectations across the board by a big margin.
• The market now expects the first rate cut in June.

JPY

• The BoJ kept its monetary policy unchanged as expected with interest rates at
  -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
• The Japanese CPI eased further across all measures
  which makes it even harder to expect a rate hike from the BoJ anytime soon.
• The latest Unemployment Rate ticked lower hovering around cycle
  lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The Japanese wage data missed expectations again recently
  although there was a pick up from the prior reading.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, fell much more than expected recently.
• The market expects the BoJ to hike
  rates in Q2.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY is getting closer to the cycle high around the 151.90 level. From a
risk management perspective, the buyers will have a much better risk to reward
setup around the trendline where
they will also find the confluence with the
148.80 support, the red
21 moving average and the
38.2% Fibonacci retracement level.
The sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and position for a drop into the 146.60 level.

USDJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has
been consolidating since the hot US CPI report and the price action formed what
looks like a symmetrical triangle. The
price can break on either side of the pattern but what follows next is
generally a strong move in the direction of the breakout. The buyers will want
to see the price breaking higher to increase the bullish bets into the cycle
high, while the sellers will want to see it breaking lower to target the 148.80
support.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action inside the triangle. There’s not much to do
here other than waiting for a breakout or a catalyst and go with the flow.

Upcoming Events

This week is basically empty on the data front with just
the release of the FOMC Meeting Minutes tomorrow followed by the Japanese and
the US PMIs, and the US Jobless Claims on Thursday.