USD
- The Fed left interest rates unchanged as expected with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
- The US CPI and the US PPI beat expectations for the second consecutive month.
- The US Jobless Claims beat expectations.
- The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though.
- The US Consumer Confidence missed expectations although the labour market details improved.
- The market expects the first rate cut in June.
JPY
- The BoJ finally exited the negative interest rates policy as expected at the last meeting raising interest rates by 10 bps bringing the rate to a target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve control and the ETF purchases, while maintaining QE in place.
- The latest Unemployment Rate missed expectations although it continues to hover around cycle lows.
- The Japanese PMIs improved further for both the Manufacturing and Services measures although the former remains in contractionary territory.
- The Japanese wage data beat expectations by a big margin.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, came in line with expectations.
- The market expects another rate hike from the BoJ this year although the timing remains uncertain.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY is consolidating just beneath a crucial resistance level at 151.92. In fact, we can notice that the pair has formed a big ascending triangle and a break above the resistance could trigger a strong move to the upside. We can expect the sellers to step in around these levels with a defined risk above the resistance to position for a drop all the way back to the bottom trendline of the triangle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets and target new highs.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been ranging between the 151.00 support and the 151.92 resistance as the lack of key economic data and the risk of an intervention put a lid on further gains. This should change next week as we get many important US data and upside surprises will likely lead to a break of the resistance. Conversely, weak US data should trigger a selloff in the pair with a break below the 150.00 handle increasing the bearish momentum.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the pair doing basically nothing for the entire week. Traders can keep on “playing the range” by buying at support and selling at resistance until we get a breakout.
Upcoming Events
Today we conclude the week with the US PCE and Fed Chair Powell.
