USDJPY Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as
  expected at the last meeting while dropping the tightening bias in the
  statement but adding a slight pushback against a March rate cut.
• 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 Jobless Claims beat
  expectations with the data remaining steady.
• The latest US PMIs
  increased further from the prior month with the Manufacturing PMI beating
  expectations and the Services PMI missing.
• 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 at the last meeting with
  interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a
  reference cap.
• The Japanese CPI beat expectations although all
  measures eased further from the prior readings.
• 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 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 but has
lost some upside momentum recently. We’ve been stuck in a consolidation since
the hot US CPI release and despite more strong US data, the pair hasn’t managed
to sustain a rally. We can see that we have a trendline defining
the current uptrend and we can expect the buyers to lean on it to position for
a rally into the cycle high. The sellers, on the other hand, will want to see
the price breaking lower to position for a drop into the 148.80 support.

USDJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price got
rejected near the recent high at 150.90 and extended the drop today following
the beat in the Japanese CPI data. These inflation figures shouldn’t change
much at the moment though, so the main trend will still be dictated by the
strength in the US data. Nonetheless, it’s clear that the pair needed to take a
breather given the rally in the past few weeks.

USDJPY Technical Analysis –
1 hour Timeframe

On the
1 hour chart, we can see that the latest leg higher diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it should be a signal for a pullback into the
trendline around the recent swing low at 150.25. This is where the buyers will
look for a bounce and a rally into the cycle high, while the sellers will seek
a break to the downside to target the 148.80 support.

Upcoming Events

This week we have some important economic data on the
agenda. We begin today with the release of the US Consumer Confidence report.
On Thursday, we will see the Japanese Industrial Production and Retail Sales
and later in the day, the US PCE and the latest US Jobless Claims figures.
Finally, on Friday, we conclude the week with the Japanese Unemployment Rate
and the US ISM Manufacturing PMI.

See the video below