USDJPY Technical Analysis

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

JPY

• The BoJ finally exited the negative interest rates
  policy as expected at
  the last meeting raising interest rates by 10 bps bringing the rate to a target
  between 0.00-0.10%. Moreover, the central bank scrapped the yield curve control
  and the ETF purchases, while maintaining QE in place.
• The latest Unemployment Rate missed expectations although it
  continues to hover around cycle lows.
• The Japanese PMIs improved further for both the
  Manufacturing and Services measures although the former remains in
  contractionary territory.
• The latest Japanese wage data came in line with expectations.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, came in line with expectations.
• The market expects another rate hike
  from the BoJ this year although the timing remains uncertain.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY finally broke out of the consolidation following another hot US CPI
report. This breakout opened the door for much higher prices with no real resistance in sight
until the 160.00 handle. From a risk management perspective, the buyers will
have a much better risk to reward setup around the previous resistance now turned support where we
can also find the confluence of the trendline and the
38.2% Fibonacci retracement level.
The sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and position for a drop into the next major
trendline around the 146.00 handle.

USDJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have
another trendline where the buyers can lean onto in case of a pullback where
they will also find the 38.2% Fibonacci retracement level for confluence. The
sellers, on the other hand, will want to see the price breaking lower to
position for a break below the 151.92 support zone with a better risk to reward
ratio.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price
has been diverging with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it could be a signal for a pullback into the trendline
and the Fibonacci retracement level around the 152.50 level. The price will
need to break below the most recent swing low at 153.87 to confirm the bigger
pullback as the sellers will likely pile in more aggressively to target the
152.50 level.

Upcoming Events

On Thursday we get the latest US Jobless Claims figures,
while on Friday we conclude the week with the Japanese CPI.

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This article was written by FL Contributors at www.forexlive.com.