Fundamental Overview
The JPY eventually increased the gains following the BoJ rate hike as Governor Ueda delivered some hawkish comments during the press conference.
On Wednesday, we had the FOMC rate decision and as expected it was a dovish one. Fed Chair Powell hinted to a September rate cut and didn’t even close the door for “several” rate cuts before the end of the year.
Yesterday, we got some general risk-off in the markets which was triggered by an ugly US ISM Manufacturing PMI release. The market has now fully priced in three rate cuts by the end of the year for the Fed and continues to raise the chances of a 50 bps cut in September.
For those bullish on the pair, this might open an unwinding opportunity if the aggressive rate cuts get priced out like we saw in Q1 2024 and if the data from Japan remains weak enough to end the BoJ hopes for further rate hikes.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY reached the key trendline around the 148.50 level where we can also find the 61.8% Fibonacci retracement level for confluence. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a new cycle high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next support around the 140.00 handle.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downward trendline defining the current bearish momentum. From a risk management perspective, the sellers will have a better risk to reward setup around the 152.00 level where they will find the confluence of the previous swing low, the 50% Fibonacci retracement level and the trendline. The buyers, on the other hand, will want to see the price breaking above those levels to regain control and increase the bullish bets into new highs.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor trendline. The sellers will likely keep on leaning on it to position for a break below the major trendline. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 152.00 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report where the consensus expects 175K jobs added in July and the Unemployment Rate to remain unchanged at 4.1%.