Fundamental Overview
The bearish momentum triggered by the dovish Fed’s Bowman comments and the end of Israel-Iran conflict last Monday remains intact as we haven’t got any other meaningful catalyst ever since. The market is now leaning more dovishly on the Fed with the pricing showing 65 bps of easing expected by year-end.
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 correct towards the bottom of the 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 we had a bit of a consolidation around the key 144.25 zone. As the price broke below the zone, the sellers started to pile in more aggressively to extend the drop into the 142.35 support. The buyers will need the price to rise back above the zone to start targeting the 146.28 level next.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as we might continue to consolidate around these levels. The sellers will keep on looking for shorts below the 144.25 zone, while the buyers will look for longs above that area. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow, we have the US ISM Manufacturing PMI and the US Job Openings. On Wednesday, we get the US ADP data. On Thursday, we conclude with the US NFP, the US Jobless Claims and the US ISM Services PMI before the US holiday on Friday.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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