Fundamental Overview
The US CPI yesterday came in line with expectations leading to a bit of a “sell the fact” reaction in the US Dollar.
The bullish momentum picked up a bit later though as Fed’s Logan delivered a hawkish comment saying that “models show that Fed funds could be very close to neutral” basically implying a lot more cautious approach on rate cuts in 2025.
The market is viewing all of this in light of the recent US election as Trump’s policies are likely to spur growth and potentially keep inflation above target for longer, making the Fed’s job of bringing inflation back to target a bit harder.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY finally extended the rally into new highs helped by a hawkish comment from Fed’s Logan. There’s no strong technical resistance now at least until the 160.00 handle.
If we get a pullback, the buyers will likely lean on the trendline with a defined risk below it to position for a rally into the 160.00 handle. The sellers, on the other hand, will want to see the price breaking lower to start targeting a drop back into the 152.00 support.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum. If we get a pullback, the buyers will likely lean on it to position for new highs, while the sellers will look for a break lower to target a break below the major trendline.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add as from a risk management perspective, the buyers will have a better setup around the trendline, while the sellers are better to wait for a technical break lower instead of trying to catch the top. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US PPI and the US Jobless Claims figures. Tomorrow, we conclude the week with the US Retail Sales data.