FUNDAMENTAL OVERVIEW
USD:
The US Dollar remains on the backfoot as the bearish momentum set by the USD/JPY intervention risks kept weighing on the greenback. US Treasury Secretary Bessent yesterday said that they are not intervening in dollar-yen now and that gave the dollar a bit of a boost although it didn’t last long.
The Fed kept interest rates unchanged as expected and upgraded a bit its current economic outlook in the statement to reflect the recent economic data. There was no surprise other than Fed’s Waller voting for a cut. That might have been just his last attempt to secure the nomination for the Fed chair job. Time will tell.
Fed Chair Powell didn’t offer much in terms of forward guidance and just stuck to the script by reiterating the neutral stance and data-dependency. Today, we get the latest US Jobless Claims figures which could give the dollar some support if they come out strong. Otherwise, the greenback might remain on the backfoot until further notice.
JPY:
On the JPY side, nothing has changed. As a reminder, the BoJ left interest rates unchanged as expected last week and upgraded slightly growth and inflation forecasts due to the expansionary fiscal policies.
Governor Ueda didn’t offer anything new in terms of forward guidance as he just repeated that they will keep raising rates if the economic outlook is realised. He also added that April price behaviour will be a factor to mull over a rate hike. This suggests that April is when they expect to deliver another rate hike if the data supports such a move.
The Japanese Yen strengthened across the board solely because of talks of “rate checks” as market participants feared an imminent intervention, which eventually never came. Interventions don't fix the fundamental problems, so the JPY should continue to weaken until the BoJ turns more hawkish.
USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDJPY is consolidating below the key 154.50 support now turned resistance. The sellers will likely step in around the resistance with a defined risk above it to position for a drop into the major trendline. The buyers, on the other hand, will look for a break higher to pile in for a rally back into the 159.00 handle.
USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that the strong bearish momentum has faded recently. There’s not much else we can add here as the sellers would have a better risk to reward setup around the resistance, while the buyers will look for a break higher to pile in for new highs.
USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have a minor upward trendline defining the current price action. If we get a pullback into the trendline, we can expect the buyers to lean on it to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into the major trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US Jobless Claims figures. Tomorrow, we conclude the week with the Tokyo CPI and the US PPI report.
