USDJPY Technical Analysis – The data is key now


  • The Fed hiked by 25 bps as
    expected and kept everything unchanged at the last meeting.
  • Fed Chair Powell reaffirmed their data dependency
    and kept all the options on the table.
  • Inflation measures
    since then showed further disinflation.
  • The labour market
    displayed signs of softening although it remains fairly tight.
  • Overall, the economic data started to surprise to
    the downside lately.
  • The Fed members are leaning more towards a pause
    rather than another rate hike.
  • The market doesn’t expect the Fed to hike anymore.


  • The BoJ kept everything unchanged as expected at the last meeting but
    implicitly tweaked the YCC policy keeping the target band unchanged but giving
    more flexibility with a hard cap at 1.00%.
  • The Japanese CPI data surprised to the upside recently
    with the core-core reading reaching again the previous high.
  • The Unemployment Rate surprisingly jumped to 2.7%
    although it remains near the lows.
  • ·BoJ’s Governor Ueda at the Jackson Hole Symposium
    reaffirmed that inflation is still below target and that’s why they’re sticking
    with their monetary easing. This was also echoed by other BoJ members, but they
    are starting to see the light at the end of the tunnel.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY sold off last Friday into the 145.00 support where we
had also the confluence with the
red 21 moving average and
bounced back strongly with the pair now targeting a new high. There’s no real
resistance now until the 150.00 handle, which is also what the majority of
market participants are targeting at the moment.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we’ve been diverging with the
MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we only got pullbacks, but one strong
catalyst and we could see a fast reversal, like the one seen after the big miss
in the US Job Openings last week.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with the MACD right when it was falling into the key
145.00 support. We then saw a strong bounce and a complete reversal that is now
approaching the previous high. In case we see a pullback, the level to watch
will be the 146.56 resistance turned
where we have also the confluence with the red 21
moving average. This is where we can expect the buyers to pile in with a
defined risk below the level to target the 150.00 handle. The sellers, on the
other hand, will want to see the price breaking lower to position for another
fall into the 145.00 support.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI tomorrow and the US Jobless Claims on Thursday being the
main highlights. The market pricing is unlikely to change unless the data comes
in really hot in which case, we should see the US Dollar strengthening. On the
other hand, weaker readings might just bring forward rate cuts expectations and
weigh on the greenback. We conclude the week with the Japanese wage data on
Friday which is a key metric for the BoJ and its policy discussions. The last
time the data missed expectations and weakened the yen.

See also the video below

This article was written by FL Contributors at Source