FUNDAMENTAL OVERVIEW
USD:
The US Dollar weakened across the board again yesterday despite stronger than expected US jobless claims and lack of any other meaningful catalyst. We got a brief rally in the greenback after Trump announced that he reached a “framework” of a deal for Greenland and that he won’t go ahead with tariffs, but it’s clear that it wasn’t enough to remove the bearish pressure on the dollar.
Barring another geopolitical escalation somewhere (Iran the most notable one), the focus will likely switch to the US data and the Fed’s interest rate path for 2026. The data has been improving recently, especially on the labour market side. If we get more of such or even better, that will likely keep supporting the US Dollar as rate cuts get slowly priced out.
JPY:
On the JPY side, the BoJ today left interest rates unchanged as expected and upgraded slightly growth and inflation forecasts due to the expansionary fiscal policies. There was no surprise there.
During the Press Conference, 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.
During Ueda’s press conference, the Japanese Yen started to roll over again and crossed the 159.00 level on USD/JPY. Soon after that, we got a strong spike lower that brought the pair down by 200 pips in a couple of seconds. It might have been an intervention or a “rate check”, but whatever that was, it has caught the market attention and acted as a warning for JPY bears.
USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDJPY crossed briefly the 159.00 level before getting smacked down by a suspected intervention. This could limit the upside in the short-term for fears of other interventions. The sellers will likely step in around the 159.00 level with a defined risk above it to position for a correction into the 154.50 support. The buyers, on the other hand, will look for a break higher to pile in for a rally into new highs.
USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have a minor support zone around the 157.40 level. We might get stuck in a range here with the 159.00 level as resistance. The market participants 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 pair will likely stay in the range until we get some strong catalyst to trigger a breakout.
UPCOMING CATALYSTS
Today we conclude the week with the US Flash PMIs.
