Fundamental
Overview
The USD remains mixed
across the board as there’s no real divergence in FX as the market continues to
price in more and more cuts for all the central banks and the general
uncertainty weighs on conviction.
At the moment, the market
is more driven by the risk sentiment which changes very fast depending on the
tariff headlines. Following yesterday’s selloff in the US stock markets, traders
increased again the rate cuts expectations for the Fed with 105 bps of easing
seen by year end and 55% chance of a rate cut at the May FOMC meeting.
On the JPY side, the
currency has been driven mainly by global events rather than domestic
fundamentals. The global stock market selloff and the growth fears made the
market to scale back rate hikes expectations.
Traders now see the BoJ remaining
on hold for the rest of the year. The Japanese Yen continues to bounce around with
changes in the risk sentiment triggered by tariff headlines.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY fell back to the lows in another bout of risk-off flows. The
sellers will now want to see the price breaking below the lows to increase the
bearish bets into the 140.00 handle next. The buyers, on the other hand, will
want to see the price rising back above the 146.60 level to start targeting the
148.60 level again.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the recent price action with the pair rolling over from the
148.00 handle and accelerating the downward momentum as the risk-off sentiment
increased yesterday. The price is now bouncing around the lows. The buyers are
likely stepping in here with a defined risk below the low to target a rally
back into the 148.60 level. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into new lows.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will look for a break above the
146.60 level, while the sellers will target a break below the 144.55 low or
wait for the rally into the 146.60 level to short at better prices. The red
lines define the average daily range for today.
Upcoming
Catalysts
Today the tariffs went into effect and the
focus will remain on potential news on negotiations. Tomorrow, we get the US
CPI report and the latest US Jobless Claims figures, while on Friday we
conclude the week with the US PPI and the University of Michigan Consumer
Sentiment survey.
Watch the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.