USDJPY Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as expected at the last meeting, with virtually no change in its statement. The Dot Plot showed three more rate cuts for 2024 and the economic projections were improved with higher growth and inflation and lower unemployment.
• U.S. first-quarter GDP surprisingly beat expectations, although its main components nonetheless showed a strong economy. Core PCE, however, was surprised on the upside, pushing rate cuts further.
• The US CPI beat expectations for the third consecutive month, while the US PPI was in line with forecasts.
• U.S. NFP beat expectations across the board, although average hourly earnings were in line with forecasts.
• US April PMIs missed expectations, with commentary pointing to weaker inflationary pressures but also an increase in layoffs.
• The market expects a first rate cut in September.

JPY

• The BoJ left interest rates unchanged as expected, with no other major changes.
• The latest unemployment rate fell short of expectations, although it continues to hover around cycle lows.
• Japanese PMIs have further improved for both manufacturing and services measures, although the former remain in contraction territory.
• The latest Japanese salary data is in line with expectations.
• Tokyo’s CPI, which is considered a leading indicator of the national CPI, far exceeded expectations across the board, although it was attributed to a one-time factor.
• The market expects another rate hike from the BoJ this year, although the timing remains uncertain.

USDJPY Technical Analysis – Daily Time Frame

On the daily chart, we can see that USDJPY finally managed to break the key 155.00 mark and extended the rally to new highs as Japanese officials continue to refrain from any intervention given the fundamentals strong against the yen. From a risk management perspective, it is worth keeping an eye on the trendline around the 151.92 level, where one can also find the 50.0% Fibonacci retracement level for the confluence. If price gets there at some point, we can expect buyers to step in with defined risk below the trendline to position themselves for a rally to new highs. Sellers, on the other hand, will want to see the price decline to increase bearish bets on the next major trendline around the 146.00 handle.

USDJPY Technical Analysis – 4 hour time frame

On the 4-hour chart, we can see that price is starting to diverge with the MACD, which is usually a sign of weakening momentum, often followed by pullbacks or reversals. In this case, this could be a signal for a pullback into the minor trendline around previous resistance now turned support at 155.00. This is where buyers will look to buy the dip with defined risk below the trendline to position themselves for a rally towards the 160.00 handle. Sellers, on the other hand, will want to see the price decline to position themselves for a fall into the 151.92 support zone.

USDJPY Technical Analysis – 1 Hour Time Frame

On the hourly chart, we can take a closer look at the recent price development, with a higher peak following the unchanged policy decision by the BoJ and Governor Ueda’s comments. The first opportunity to buy the dip will present itself around another minor trendline where we also have the 61.8% Fibonacci retracement level for the confluence. Sellers, on the other hand, will look for a downside breakout to position themselves for a fall into the next trendline around the 154.60 level.

Events to come

Today we wrap up the week with the US PCE report.