USD
- The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
- The latest US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
- The US NFP report beat expectations across the board by a big margin.
- The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
- The US Consumer Confidence report came in line with expectations but the labour market details improved considerably.
- The market now expects the first rate cut in May.
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 Japanese wage data missed expectations again today although there was a pick up from the prior reading.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, fell much more than expected recently.
- The market expects the BoJ to hike rates in Q2.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY bounced from the 146.60 support where we had also the red 21 moving average for confluence, and rallied all the way up to the recent high at 148.80. This is where the sellers are likely to step in with a defined risk above the level to position for a drop back into the support and targeting a break below it. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the cycle high around the 151.90 level.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair was trading inside a falling channel and broke out last Friday following the strong NFP report. The buyers increased the bullish bets on the break of the top trendline but found a strong resistance at the 148.80 high. We can see that we have a good support zone around the 147.80 level where we can find the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in again with a defined risk below the broken trendline and target a break above the high.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the consolidation around the high. We can notice that we have a support zone around the 148.30 level where the buyers keep piling in with a defined risk below the level. A break to the downside should see the sellers stepping in and target a drop into the next support zone around the 147.80 level. The buyers, on the other hand, will have two opportunities to position for new highs either from a breakout to the upside or from the support around the 147.80 level.
Upcoming Events
This week is basically empty on the data front with just the latest US Jobless Claims figures on Thursday being the only notable release.
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