Fundamental Overview
Last week, we saw the USDJPY pair falling after the US CPI report as the market shrugged off rate hikes fears and consolidated the Fed’s higher for longer stance. The following day, the JPY started to lose ground again as not only the interest rates differential remains strong, but we have also the positive risk sentiment due to global growth expectations.
In such an environment, the JPY is unlikely to catch a sustained bid. The trend will likely change only when we start to get some recessionary US data that will make the market to price in a more aggressive rate cut path.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDJPY pair is trading in the middle of the major trendline and the 160.00 handle. The price rallied above the key 155.00 level again recently which is acting as a kind of barometer for the sentiment on the pair with the price staying above being more bullish and below it being more bearish.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that more clearly the rally above the key 155.00 level following the US jobless claims figures and then an extension to the 156.00 handle. We can notice that the 156.00 level has been a strong resistance, so a break above it should see the buyers increasing the bullish bets into the 156.80 level next.
The sellers, on the other hand, are likely leaning on this resistance with a defined risk above it to position for a drop into the 155.00 level targeting a break below it. If we do get another pullback into the 155.00 level, we can expect the buyers to pile in again and target a rally into the 160.00 handle.
Upcoming Catalysts
This week is pretty empty on the data front with the only highlight being the US PMIs on Thursday.
