USDJPY Technical Analysis – The JPY thrives amid the risk-off flows

Fundamental
Overview

The USD continues to be
supported against most major currencies, especially the commodity currencies,
as the markets remain in a risk-off mood following some bad US data releases.
In fact, since last Friday, we got weak US Flash Services PMI, UMich final Consumer Sentiment and this a weak US Consumer Confidence report on Tuesday.

The problem is that we’ve
also got inflation expectations jumping to new highs in both the UMich and the
Conference Board report. The market might be fearing that in case we get a
slowdown, the Fed might not be fast enough in cutting rates amid inflation
remaining above target and uncomfortably high long-term inflation expectations.

This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot. Today, we
get the US Jobless Claims figures and if we get a new high in the data, then we
can expect another wave of risk-off flows.

On the JPY side, nothing
has changed fundamentally but the Japanese Yen has been supported across the
board by the risk-off sentiment and falling Treasury yields. Tomorrow, we get
the Tokyo CPI where hot numbers might see the markets adding more to their bets
of a third hike by the end of the year.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY is consolidating around the key 148.60 level. This is where the
buyers are stepping in with a defined risk below the level to position for a
rally into the 160.00 handle. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 140.00 handle
next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action around the key level as the
bearish momentum waned. There’s not much else we can add here as the buyers
will look for a bounce and a rally into the major trendline, while the sellers will look for a
break lower to push into new lows.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the current consolidation
around the lows. The sellers will likely continue to lean on the trendline to
position for the break below the support, while the buyers will look for a
break higher to increase the bullish bets into the 150.93 level next. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims
figures, while tomorrow we conclude the week with the Tokyo CPI and the US PCE
data.

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