Fundamental Overview
The USD rallied across the board last Friday following the hot US NFP report. The market priced out all the aggressive expectations and it’s now finally in line with the Fed’s projections.
The focus remains on the economic data. If we keep getting strong US data, then USDJPY will likely continue to drift higher. Conversely, if the data weakens significantly, the market will price back in the aggressive cuts and drive USDJPY lower.
The next key event to watch will be the US CPI report on Thursday. We will likely need a hot report to see a strong rally, while a big miss could see the market price back in a more aggressive path for rate cuts.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY broke above the key 147.22 level and extended the rally into the 149.00 handle before pulling back. We can expect the buyers to step back in around the 147.22 level to position for a rally into the 152.00 handle. The sellers, on the other hand, will want to see the price falling back below the 147.22 level to pile in for a drop into the 145.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the current bullish momentum. The buyers will likely lean on the trendline with a defined risk below it to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking below the trendline and the 147.22 level to position for a drop into the 145.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have also the 61.8% Fibonacci retracement level standing around the support at 147.22. This should technically strengthen the support zone. The buyers will look for a bounce around these levels, while the sellers will want to see a break lower. The red lines define the average daily range for today.
Upcoming Catalysts
This week the calendar is a bit empty on the data front. The main events are all scheduled for the latter part of the week. On Thursday, we have the US CPI and the US Jobless Claims. On Friday, we conclude with the US PPI and the University of Michigan Consumer Sentiment report.