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.
• Fed Chairman Powell maintained a neutral stance, saying it was premature to react to recent inflation data given possible obstacles on the path to their 2% target.
• The US CPI and PPI exceeded expectations for the second month in a row.
• U.S. NFP beat expectations across the board, although average hourly earnings were in line with forecasts.
• The US ISM Manufacturing PMI significantly beat expectations as the price component continued to rise, while the US ISM Services PMI missed expectations as the price index fell to a 4-year low .
• There is now a 50/50 chance of a rate cut in June.

JPY

• The BoJ finally ended its negative interest rate policy, as planned at the last meeting, by raising interest rates by 10 basis points, bringing the rate back to a target of between 0.00 and 0. .10%. Additionally, the central bank abandoned yield curve control and ETF purchases, while maintaining QE.
• 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, considered a leading indicator of the national CPI, came in line with expectations.
• 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 continues to consolidate just below a crucial resistance level at 151.92. In fact, we can notice that the pair has formed a large ascending triangle and a break above the resistance could trigger a strong upward move. We can expect sellers to intervene around these levels with a defined risk above resistance to position themselves for a decline to the lower trendline of the triangle. Buyers, on the other hand, will want to see the price move higher to increase bullish bets and aim for new highs.

USDJPY Technical Analysis – 4 hour time frame

On the 4-hour chart, we can see that the price is between support at 151.00 and resistance at 151.92, with the risk of intervention limiting further gains. Price recently moved up above resistance and is now leaning against it, threatening a breakout. Even if we get a breakout, it would be better to wait for the US CPI report tomorrow, as a failure would likely trigger a sell-off, leaving behind a counterfeit.

USDJPY Technical Analysis – 1 Hour Time Frame

On the hourly chart, we can take a closer look at the recent price action with the rebound from the support at 151.00 towards the resistance at 151.92. We can see that we have another strong zone around the 151.50 level that price has reacted to several times over the past few weeks. If price falls back into this area, buyers may want to step in with a set risk below to position themselves for a better risk/reward breakout. Sellers, on the other hand, will want to see the price decline to increase bearish bets to support at 151.00, targeting a breakout to the downside.

Events to come

Tomorrow we will receive the US CPI report and the FOMC minutes. On Thursday we will have the US PPI and the latest US jobless claims figures. On Friday, we wrap up the week with the University of Michigan Consumer Sentiment Survey.

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