USD
- The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- The latest US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
- The US NFP report beat expectations across the board by a big margin.
- The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
- The US Consumer Confidence report came in line with expectations but the labour market details improved considerably.
- The market now expects the first rate cut in May.
JPY
- The BoJ kept its monetary policy unchanged as expected with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
- The Japanese CPI eased further across all measures which makes it even harder to expect a rate hike from the BoJ anytime soon.
- The latest Unemployment Rate ticked lower hovering around cycle lows.
- The Japanese PMIs improved for both the Manufacturing and Services measures although the former remains in contractionary territory.
- The Japanese wage data missed expectations again recently although there was a pick up from the prior reading.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, fell much more than expected recently.
- The market expects the BoJ to hike rates in June.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY bounced on the red 21 moving average, as the buyers piled in with a defined risk below it, and broke the resistance at 148.80 following some dovish comments from BoJ’s Deputy Governor Uchida. The buyers should now have even more conviction for a rally into the cycle high and will look for dip buying opportunities on the lower timeframes.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the resistance has now turned into support and we can also find the confluence with the trendline, the 38.2% Fibonacci retracement level and the red 21 moving average. This is where the buyers are likely to pile in with a defined risk below the trendline to position for a rally into the cycle high. The sellers, on the other hand, will want to see the price breaking below the trendline to invalidate the bullish setup and position for a drop back into the 146.60 level.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a bit of a consolidation now around the 149.25 level. If the momentum remains strong, then we will likely see the price breaking higher with the buyers increasing the bullish bets into the cycle high. Conversely, a break to the downside should take us into the support zone where the buyers will start to position for another rally and the sellers will look forward to a break below the trendline.
