USDJPY Technical Analysis – Focus on the US CPI report

Fundamental
Overview

The USD has been stronger
since last Friday as Trump floated reciprocal
tariffs. That came after a good US NFP report where the data was mixed at
best but still pointing to strength. The jump in average hourly earnings caught
the eye but that might have been distorted by the drop in average weekly hours.

We’ve also got another jump
in inflation expectations in the University of Michigan Consumer Sentiment
survey showing that the tariffs news is the main culprit of the recent surge in
expectations.

The focus now switched to
the US CPI report tomorrow where Core inflation is expected to tick lower which
would be a welcome news. A lower than expected print should see the US Dollar
losing ground across the board once again, while a hot reading might boost the
greenback for the rest of the week.

On the JPY side, we haven’t
got anything new after the strong Japanese wage data last week gave the Yen a huge
boost as the market increased the bets for a potential third hike this year. The
JPY is now losing some ground as higher Treasury yields are weighing on the
Yen.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY started to consolidate around the lows as the market awaits the
US CPI report tomorrow. From a risk management perspective, the sellers will
have a much better risk to reward setup around the downward trendline
to position for a drop into the 149.00 handle. The buyers, on the other hand,
will want to see the price breaking above the trendline to start targeting the
160.00 handle next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the choppy price action around the lows with the first notable
resistance
standing near the 154.00 handle. There’s not much we can glean from this timeframe
so we need to zoom in to see some more details.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a range between the 150.95 support and the 152.42 resistance.
The sellers will likely step in around the resistance to position for a drop
into the support, while the buyers will look for a break higher to target the
154.00 resistance next. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the Fed Chair Powell Testimony.
Tomorrow, we get the US CPI report. On Thursday, we have the US PPI and the US
Jobless Claims. On Friday, we conclude the week with the US Retail Sales.

Watch the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.