USD
- The Fed left interest rates unchanged as expected at the last meeting 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.
- The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
- The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
- The market now expects the first rate cut in September.
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 latest Japanese wage data came in line with expectations.
- The Japanese 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 got stuck in some consolidation just beneath the 155.00 handle as the market might be awaiting some new catalyst to push into new highs. From a risk management perspective, the buyers will have a much better risk to reward setup around the previous resistance now turned support where we can also find the confluence of the trendline and the 38.2% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the next major trendline around the 146.00 handle.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another trendline where the buyers can lean onto in case of a pullback where they will also find the 38.2% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the 151.92 support zone and then target a break below it.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the rangebound price action between the 153.90 support and the 154.80 resistance. We got a spike lower tonight following the Israeli retaliation against Iran, but the move was completely erased as Iran downplayed the airstrikes. We might now continue to see the market playing the range with selling pressure around the resistance and buying pressure around the support until we get a catalyst for a breakout.
