Fundamental Overview
The bullish momentum in the USDJPY pair seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now priced out the aggressive rate cuts expectations and it’s almost perfectly in line with the Fed’s projections.
Therefore, we will likely need more strong US data to see the market pricing in an earlier pause in the Fed’s easing cycle and give the US Dollar a further boost.
In the bigger picture, it looks like the US long term yields are bound to rise further, which should keep the uptrend in the USDJPY pair intact, but more bullish catalysts for the greenback would give more conviction for the buyers.
The next big risk events will be in November when we get the October data and the US election.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY probed above the key swing level at 149.40 but failed to sustain the breakout. The sellers will likely pile in around these levels to position for a drop back into the 147.22 level, while the buyers will want to see the price rising back above the swing level to position for a rally into the 152.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent price action formed a rising wedge right around the 150.00 handle. The sellers will want to see the price breaking the pattern to the downside to increase the bearish bets into the 147.22 level. The buyers, on the other hand, will likely lean on the bottom trendline to position for a rally into new highs.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the price action inside the pattern. There’s not much else we can add here as the sellers will look for a downside break, while the buyers will want to see a bounce on the bottom trendline. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with just a couple of key economic releases. On Thursday, we get the US Retail Sales and US Jobless Claims data, while on Friday we conclude with the Japanese CPI.