US:
- The Fed left interest rates unchanged as
expected at the last meeting. - The macroeconomic projections were revised higher
as the economy showed much stronger resilience than expected and the Dot Plot
showed that the majority of members still expects another rate hike by the end
of the year with less rate cuts in 2024. - Fed Chair Powell
reaffirmed their data dependency but added that they will proceed carefully. - The latest US Core PCE
came
in line with expectations with disinflation continuing steady. - The labour market remains
fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report. - The ISM Manufacturing PMI beat
expectations while the ISM Services PMI came in
line with forecasts in another sign that the US economy remains resilient. - The market doesn’t expect the Fed to hike anymore.
Japan:
- The BoJ kept everything unchanged as expected at the last meeting.
- The Japanese CPI showed that inflationary pressures
remain high with the core-core reading hovering at the cycle highs. - The Unemployment Rate missed expectations although it matched
the previous reading. - The Japanese Manufacturing PMI fell further into contraction but
the Services PMI remains in expansion. - BoJ governor Ueda repeated that they will not
hesitate to take additional easing measures if needed and clarified that the
recent comment on “quiet exit” from monetary easing was misinterpreted. - The Tokyo CPI, which is seen as a leading
indicator for national CPI, continues to fall although it remains above the BoJ
target. - The Japanese wage data last week missed expectations which
is unlikely to lead to a more hawkish BoJ since they want to see a higher wage
growth.
USDJPY Technical Analysis –
Daily Timeframe
On the daily chart, we can see
that the USDJPY pair last week crossed the key 150.00 handle after being
smacked back down by the Japanese intervention. The price bounced soon after
and started to consolidate around the 149.00 level as the market is now waiting
for something to push in either direction. The US economic data is still
supporting the upside for the pair and it’s likely to continue until we see
weaker reports.
USDJPY Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the
intervention caused the price to break out of the bottom trendline of the rising wedge. The
price then retested the broken trendline and continued lower towards the recent
lows. We can see that we have a massive divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The breakout of the wedge raised the odds for a bigger correction
into the 145.00 support.
USDJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that we
have a range between the 149.30 resistance and
the 148.30 support. The sellers are likely to lean on the the resistance to
position for a bigger correction into the 145.00 support. The buyers, on the
other hand, will lean on the lower bound of the range to position for a rally
into new highs and increase the bullish bets on a breakout.
Upcoming Events
This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report. Strong
readings are likely to keep the USDJPY pair supported, while weaker figures
should weigh on it.
See the video below
This article was written by FL Contributors at www.forexlive.com. Source