USD
- The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
- The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
- The labour market continues to soften but remains resilient with US Jobless Claims beating expectations week after week.
- The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
- The US Retail Sales beat expectations across the board.
- The University of Michigan Consumer Sentiment report jumped to the highest levels since 2021.
- The Fed members recently have been pushing back on the aggressive rate cuts expectations.
- The market’s expectations for the first rate cut were pushed back to May following strong economic data.
JPY
- The BoJ kept its monetary policy unchanged as expected with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
- Governor Ueda repeated once again that they won’t hesitate to take easing measures if needed but he’s becoming more optimistic on achieving their 2% target.
- The latest Unemployment Rate remained unchanged near cycle lows.
- The last Japanese Manufacturing PMI fell further into contraction but the Services PMI ticked higher remaining in expansion.
- The latest Japanese wage data missed expectations by a big margin and as a reminder the BoJ is focusing on wage growth to decide whether to tweak its monetary policy.
- The Japanese CPI eased further across all measures which makes it even harder to expect a rate hike from the BoJ anytime soon.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY erased most of the drop from the cycle high with the pair now at the levels last seen last November. The price was overstretched at some point as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. We indeed got the pullback into the moving average and that’s now where the battle between buyers and sellers will begin.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price pulled back into the key trendline where we can also find the 38.2% Fibonacci retracement level for confluence. This is where the buyers stepped in with a defined risk below the 146.61 support to position for a rally into the cycle high. The sellers, on the other hand, will want to see the price breaking below the trendline and the support level to position for a drop back into the lows.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with the drop today triggered by some optimistic comments from Governor Ueda. If the price were to rise above the previous support turned resistance around the 147.70 level, we can expect the buyers to increase the bullish bets into the cycle high. The sellers, on the other hand, leant on the resistance to position for a breakout of the trendline with a better risk to reward setup.
Upcoming Events
This week is a bit more tranquil on the data front with the major releases scheduled for the final part of the week. We begin tomorrow with the Japanese and the US PMIs. On Thursday, we have the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the Tokyo CPI and the US PCE report.
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