USDJPY Technical Analysis – More upside is expected

US:

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 solid.
Overall, the economic data started to surprise to
the downside lately.
This week the ISM Services PMI and Jobless Claims
surprised to the upside.
The Fed members are leaning more towards a pause in
September rather than another rate hike.
The market doesn’t expect the Fed to hike at the
September meeting, but there’s now a 50/50 chance of a hike in November.

Japan:

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%
recently, although it remains near the lows.
BoJ 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, although
they are starting to see the light at the end of the tunnel.
The Japanese
wage data today showed a slowing wage growth, and this is something the BoJ
focuses on particularly.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY is trading within a rising channel and the red 21 moving average is
acting as dynamic support for the buyers. We recently got a classic “break and
retest” on the 146.56 resistance turned support and
given the recent strong US data and weak Japanese wage growth, we should see
the pair starting to climb up again with the target standing at the 150.00
handle.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
break and retest pattern on the 146.56 support where we
had also the confluence with the
38.2% Fibonacci retracement level.
The buyers should start to pile in here with a defined risk below the support
and target the 150.00 handle. The sellers, on the other hand, will want to see
the price to fall below the support invalidating the bullish setup and pile in
for a fall into the 145.00 support.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor downward trendline
defining the recent short-term downtrend. If the price breaks above the
trendline and the recent swing high around the 147.38 level, the buyers will
have another confirmation that a rally into the 150.00 handle may be about to
start.