USDJPY Technical Analysis – We are testing some key levels

Fundamental
Overview

The USD got a boost across
the board yesterday following the higher than expected US
CPI report. The greenback couldn’t extend into new highs though as the market
was aware of the “January-effect” and therefore didn’t put much weight on this
particular release.

What weigh more on the
market were the positive headlines on the reciprocal tariffs as the White House
adviser Hassett said
that the reciprocal tariffs were a work in progress and conversations with
other countries began earlier that day, potentially implying negotiations.

Moreover, we got a very positive
post
from Trump saying that he had a call with Putin and the tone of it was
upbeat on a peace deal in the Russia-Ukraine war. He was even invited to
Moscow. That helped the risk sentiment and weighed on crude oil (less
inflationary pressures).

On the JPY side, we got the
Japanese
PPI today and the data came in higher than expected. The Yen has been
dragged lower recently though by the rally in Treasury yields as the Japanese data
hasn’t been the market focus.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY is now testing the downward trendline. This is where we can expect the
sellers to step in with a defined risk above the trendline to position for a
drop into the 149.00 handle. The buyers, on the other hand, will want to see
the price breaking higher to increase the bullish bets into the 160.00 handle
next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see the spike into the trendline following the hot US CPI report. The sellers
started to pile in around the trendline and will want to see the price breaking
below the 153.70 support
to gain more conviction and increase the bearish bets into new lows. The
buyers, on the other hand, will likely step in around the support to position
for the break above the trendline and a rally into new highs.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum on this
timeframe. The buyers are leaning on it to push into new highs, and a break
above the counter-trendline would likely give them more conviction to increase
the bullish bets. The sellers, on the other hand, will likely continue to pile
in around these levels and increase the bearish bets on the break below the
support. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US PPI, the latest US
Jobless Claims figures and the Trump’s reciprocal tariffs announcement. Tomorrow,
we conclude the week with the US Retail Sales data.

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