Fundamental Overview
The USD has had some mixed performance since the tariffs announcement although overall it’s been marginally stronger except against the safe havens like the Swiss Franc and the Japanese Yen. There’s no real divergence in FX as the market continues to price in more and more cuts for all the central banks.
At the moment, the market is more driven by the risk-off sentiment amid the recessionary fears. Traders are now fully pricing five rate cuts for the Fed by year-end with 60% chance of a 25 bps cut at the upcoming FOMC meeting despite Fed Chair Powell saying that they are not in a hurry to cut rates.
On the JPY side, the currency has been driven mainly by global events rather than domestic fundamentals. The global stock market selloff and the growth fears made the market to scale back rate hikes expectations with the BoJ now seen on hold for the rest of the year.
The Japanese Yen continues to remain supported amid the risk-off flows as the carry trades get unwound.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY is consolidating around the lows. The sellers will likely continue to pile in around these levels with a defined risk above the 146.60 level to keep pushing into the 140.00 handle. The buyers, on the other hand, will want to see the price rising back above the 146.60 level to start targeting the 148.60 level next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent price action with the fakeout above the 146.60 level last Friday that was quickly reversed as the pair gapped lower at the open today. The price action remains rangebound between the 145.18 support and the 146.60 resistance. The market participants will look for a break on either side to pile in with more conviction and extend the moves.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers will look for a break above the 146.60 level, while the sellers will target a break below the 145.18 level.. The red lines define the average daily range for today.
Upcoming Catalysts
This week is going to be all about tariffs news ahead of the April 9 deadline, so the data won’t matter much. Nevertheless, we will get a couple of notable data releases. On Thursday, we get the US CPI report and the latest US Jobless Claims figures, while on Friday we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.
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This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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