USDJPY Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US PCE came
  in line with expectations.
• The NFP report beat
  expectations on the headline number, but the unemployment rate and the average
  hourly earnings missed notably.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Consumer
  Confidence missed expectations across the board.
• The market 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 last Japanese CPI beat expectations although all
  measures eased further from the prior readings.
• The latest Unemployment Rate remained unchanged 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 beat expectations by a big margin.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, recently came in line with expectations with the
  measures increasing from the prior report.
• The market sees a 50/50 chance that
  the BoJ hikes rates in March.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY sold off recently as the market participants started to position
for the BoJ to exit the negative interest rates policy (NIRP) probably at the
upcoming meeting on the 19^th of March. The speculation started with
the BoJ members delivering hawkish comments and the Japanese wage data beating
expectations by a big margin. The pair bounced on the key 146.60 level as the
price got overstretched but we can expect the sellers to sell the rallies into
the BoJ meeting next week.

USDJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the first
opportunity for the sellers is standing around the 147.50 level where we can
find the previous swing low level and the red 21 moving average. This is
where we can expect the sellers to step in with a defined risk above the level
to position for a break below the 146.60 support and
target the 145 handle next. The buyers, on the other hand, will want to see the
price breaking higher to increase the bullish bets into new highs.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price started to diverge with
the MACD as it
approached the key 146.60 level. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, if the price were to
break above the 147.50 level, then we can expect the sellers to step in around
the 148.20 level which is generally the target of the divergent formation. A
break above the 148.20 level would see the buyers increasing further their
bullish bets into the highs.

Upcoming Events

Today we have the main event of the week, that is
the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.