Fundamental Overview
The US dollar remains under pressure as we got a few bearish catalysts this week. The first one came from Fed’s Bowman who delivered dovish comments and even suggested that she would support a rate cut in July if inflationary pressures were to remain muted. Since she’s been a hawkish member, the market reacted strongly to such a development.
The second catalyst came later in the same day as Iran delivered a symbolic retaliation much like the one witnessed in 2020 with Suleimani. The market then expected the end of the conflict which was validated soon after by Trump’s post on his social media platform.
Finally, yesterday we got Trump lamenting again about the delay in rate cuts and WSJ reported that the President was considering speeding up the announcement of a new Fed Chair for next year. Month-end flows might also be responsible for dollar weakness.
On the JPY side, nothing has changed fundamentally, and the currency has been mainly driven by the risk sentiment. As a reminder, the BoJ kept interest rates unchanged at 0.5% and reduced the bond tapering plan for fiscal year 2026 as expected at the last meeting. The BoJ continues to place a great deal on the US-Japan trade deal and the evolution of inflation.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY continues to roll over towards the bottom of the recent range around the 142.35 level. That’s where we can expect the buyers to step in with a defined risk below the level to position for another rally into the 148.28 resistance. 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 that as the price broke below the 146.28 level, the sellers piled in more aggressively to target the 144.25 zone. The price is now breaking further below the 144.25 zone which should see the sellers increasing their bearish bets into the 142.35 support. If the price rises back above the zone, we can expect the buyers to step in to position for a rally back into the 146.28 level next.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see we now have a downward trendline defining the bearish momentum on this timeframe. If the price pulls back into the trendline, we can expect the sellers to lean on it with a defined risk above it to position for a break below the 144.25 zone with a better risk to reward setup. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we get the latest US Jobless Claims figures and the Final US Q1 GDP report. Tomorrow, we conclude the week with the Tokyo CPI, the US PCE price index and the Final University of Michigan Consumer Sentiment report.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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