FUNDAMENTAL OVERVIEW
USD:
The US dollar weakened across the board yesterday after Trump announced on his Truth Social account a five-day ceasefire for negotiations toward “a complete and total resolution of the hostilities.”
However, the selloff in the greenback was short-lived as Iran quickly denied the claims. Most notably, Iranian Parliament Speaker Ghalibaf, who is reportedly the key figure handling negotiations with the US, stated that no talks had taken place with Washington.
These conflicting reports have kept markets largely rangebound after the initial spike, with traders waiting for clearer developments. For now, the US dollar is likely to remain supported until there is an official de-escalation.
JPY:
On the JPY side, nothing has changed as lack of progress on the inflation front and geopolitical risks will likely keep weighing on the currency. Today, we got the latest Japanese CPI report, and the data showed further easing in inflation with the Core figure falling well below the BoJ’s 2% target.
The initial outcome of the spring wage negotiations points to a third straight fiscal year in which Japan sees average wage hikes of above 5%. This should keep the tightening bias intact, but the central bank might want to wait for the US-Iran war to end to avoid exacerbating growth fears.
USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDJPY pulled back from the 160.00 handle and started to consolidate above the 157.65 level that is now acting as support. We can expect the buyers to keep stepping in around the support with a defined risk below it to target a rally into the 161.95 level. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the major trendline around the 154.00 handle.
USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see more clearly the consolidation between the 157.65 support and the 159.75 resistance. Traders will likely continue to play the range by buying at support and selling at resistance until we get a breakout on either side.
USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much we can add here as the buyers will have a better risk to reward setup around the support, while the sellers will gain more conviction on a break below the support. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have the US PMIs. On Thursday, we get the latest US Jobless Claims figures. The focus remains on the US-Iran war and now the negotiations, so keep an eye on the headlines.
