USD
- The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
- The US PCE came in line with expectations.
- The US Jobless Claims missed expectations although the data is still in the recent ranges.
- The latest US ISM Manufacturing PMI missed expectations by a big margin.
- The US Consumer Confidence missed expectations across the board.
- The market expects the first rate cut in June.
JPY
- The BoJ kept its monetary policy unchanged as expected at the last meeting with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
- The Japanese CPI beat expectations although all measures eased further from the prior readings.
- The latest Unemployment Rate remained unchanged 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 although there was a pick up from the prior reading.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, came in line with expectations.
- The market expects the BoJ to hike rates in Q2.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY last week sold off following some hawkish comments from BoJ’s Takata. The buyers stepped in around the red 21 moving average as the big picture remained unchanged. Last Friday though, the US ISM Manufacturing PMI missed expectations by a big margin and caused some rethink for the US Dollar as the weakness in the economy might return after the Q1 bounce caused by the rate cuts expectations.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the rangebound price action between the 149.60 support and the 150.90 resistance. The sellers should keep on stepping in around the resistance to position for a break below the support and target a drop into the 146.60 level. The buyers, on the other hand, will continue to pile in around the support to position for a break above the resistance and target the cycle high at 151.90.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have some key levels marked on the chart where the price has been reacting to in the past few days. Right now, we have a mini range between the 150.35 support and the 150.56 resistance. The buyers will want to see the price breaking higher to increase the bullish bets into the 150.90 level and target a break above it. The sellers, on the other hand, will want to see the price breaking lower to pile in and target the support at 149.60.
Upcoming Events
This week we have lots of important events on the agenda with the release of the US labour market data and the Fed Chair Powell testifying to Congress. We begin today with the US ISM Services PMI. Tomorrow, we have the US ADP, the US Job Openings and the Fed Chair Powell speaking. On Thursday, we get the Japanese Wage data and later in the day, the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report.
