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 last week.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase.
  • The US Consumer Confidence missed expectations although the labour market details improved.
  • The market now sees basically a 50/50 chance of a 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

USDJPY Technical Analysis
USDJPY Daily

On the daily chart, we can see that USDJPY continues to consolidate 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

USDJPY Technical Analysis
USDJPY 4 hour

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 risk of an intervention put a lid on further gains. The US ISM Manufacturing PMI yesterday gave the pair a boost to push towards the resistance, and if we get more such strong data from the US, then we will likely see the price breaking out pretty soon. Conversely, weak US data should trigger a selloff towards the lower bounds of the recent ranges.

USDJPY Technical Analysis – 1 hour Timeframe

USDJPY Technical Analysis
USDJPY 1 hour

On the 1 hour chart, we can see more closely the recent price action with the pair doing basically nothing for two weeks. We can see that we now have another important zone around the 151.50 level where the price got rejected from several times recently. This level will probably act as kind of a barometer with the sentiment being more bullish above it and more bearish below it.

Upcoming Events

Today we have the US Job Openings and tomorrow the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures while on Friday we conclude the US NFP report.

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