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 US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations and the Core 3-month and 6-month annualised rates are now below the Fed’s 2% target.
- The labour market continues to soften but remains resilient with US Jobless Claims missing expectations last week but hovering around cycle lows.
- The latest US PMIs beat expectations by a big margin for both the Manufacturing and Services measures.
- 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 sees a 50/50 chance of a rate cut in March.
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 Japanese CPI eased further across all measures which makes it even harder to expect a rate hike from the BoJ anytime soon.
- The latest Unemployment Rate ticked lower hovering around cycle lows.
- The Japanese PMIs improved for both the Manufacturing and Services measures although the former remains in contractionary territory.
- 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 Tokyo CPI, which is seen as a leading indicator for National CPI, fell much more than expected.
- The market expects the BoJ to hike rates in Q2.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY broke above the key resistance around the 146.60 level and extended the rally into the 149.00 handle before pulling back to retest the resistance now turned support. The pair started to consolidate, and it looks like the price is heading for another retest of the support where we will also find the red 21 moving average for confluence. The buyers will likely defend the level while the sellers will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the lows.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke below the upward trendline with the sellers increasing the bearish bets, but the pair eventually bounced on the key 146.60 support and started to consolidate. There’s not much to do here other than waiting for the price to either bounce or break the key support zone.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price recently broke below another minor trendline and started to fall as the sellers piled in targeting the support zone. If we get a pullback, the sellers will likely lean on the downward trendline to increase the bearish bets into the support targeting a breakout. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into new highs.
Upcoming Events
This week is going to be a really busy one with the FOMC rate decision and lots of economic data on the agenda. We begin today with the US Job Openings and the US Consumer Confidence reports. Tomorrow we will see the Japanese Industrial Production and Retail Sales, and later in the day the US Employment Cost Index and the ADP data before the FOMC rate decision. On Thursday, we have the latest US Jobless Claims figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report.
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