FUNDAMENTAL OVERVIEW
USD:
The US Dollar weakened
across the board again yesterday despite stronger than expected US
jobless claims and lack of any other meaningful catalyst. We got a brief
rally in the greenback after Trump announced that he reached a “framework” of a
deal for Greenland and that he won’t go ahead with tariffs, but it’s clear that
it wasn’t enough to remove the bearish pressure on the dollar.
Barring another
geopolitical escalation somewhere (Iran the most notable one), the focus will likely
switch to the US data and the Fed’s interest rate path for 2026. The data has
been improving recently, especially on the labour market side. If we get more
of such or even better, that will likely keep supporting the US Dollar as rate
cuts get slowly priced out.
JPY:
On the JPY side, the BoJ
today left
interest rates unchanged as expected and upgraded slightly growth and
inflation forecasts due to the expansionary fiscal policies. There was no
surprise there.
During the Press Conference,
Governor Ueda didn’t offer anything new in terms of forward guidance as he just
repeated that they will keep raising rates if the economic outlook is realised.
He also added that April price behaviour will be a factor to mull over a rate
hike. This suggests that April is when they expect to deliver another rate hike
if the data supports such a move.
During Ueda’s press
conference, the Japanese Yen started to roll over again and crossed the 159.00
level on USD/JPY. Soon after that, we got a strong
spike lower that brought the pair down by 200 pips in a couple of seconds.
It might have been an intervention or a “rate check”, but whatever that was, it
has caught the market attention and acted as a warning for JPY bears.
USDJPY TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that USDJPY crossed briefly the 159.00 level before getting smacked down by
a suspected intervention. This could limit the upside in the short-term for
fears of other interventions. The sellers will likely step in around the 159.00
level with a defined risk above it to position for a correction into the 154.50
support. The buyers, on the other hand, will look for a break higher to pile in
for a rally into new highs.
USDJPY TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see that we have a minor support zone around the 157.40 level. We might get
stuck in a range here with the 159.00 level as resistance. The market participants
will likely continue to play the range by buying at support and selling at
resistance until we get a breakout on either side.
USDJPY TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the pair will likely stay in the range until we get
some strong catalyst to trigger a breakout.
UPCOMING CATALYSTS
Today we conclude the week with the US Flash PMIs.
This article was written by Giuseppe Dellamotta at investinglive.com.