USDJPY Technical Analysis


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 Q1 GDP
surprisingly missed expectations although the core components showed a strong
economy, nonetheless. The US PCE came in line with expectations.The US NFP beat expectations across the board
although the average hourly earnings came in line with forecasts.The US PMIs missed expectations in April with the
commentary citing lower inflationary pressures but also increased layoffs. The market expects the first rate cut in


The BoJ left interest rates unchanged as expected with no other major
change. 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 considered a leading
indicator for National CPI, missed expectations across the board by a big
margin although it was attributed to a one-off factor.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 yesterday crossed the 160.00 handle and triggered an intervention
that sent the pair 500 pips lower. That level is now clearly the line in the
sand for the Japanese officials but as long as the fundamentals remain the
same, the pair will keep on advancing to new highs, especially if the US data
continues to surprise to the upside. From a risk management perspective though,
the buyers will have a much better risk to reward setup around the 152.00
handle where they will also find the confluence of the trendline and the
61.8% Fibonacci retracement level.

Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price
bounced right around the key 155.00 support where we
had also the trendline for confluence. This is where the buyers bought the dip
and positioned for a break above the 160.00 handle. The sellers, on the other
hand, will want to see the price breaking below the trendline to pile in more
aggressively and target a drop into the 152.00 support zone.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have another important resistance zone around the 157.00 handle where the price
got rejected from several times. A break above this resistance should increase
the bullish momentum as the buyers will start to pile in more aggressively and
target a break above the 160.00 handle. In the meantime, we might have set a
range between the 155.00 support and 157.00 resistance with the market
participants waiting for a catalyst to break out in either direction.

Upcoming Events

Today, we have the US Q1 Employment Cost Index and
the Consumer Confidence report. Tomorrow, we get the US ADP, the ISM
Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we
will see the latest US Jobless Claims figures. On Friday, we conclude the week
with the US NFP and ISM Services PMI.

See the video below

This article was written by FL Contributors at