Fundamental
Overview
The USD hasn’t done much
since the FOMC decision as the market awaits something new to push into either
direction. The Fed delivered on expectations with no surprises whatsoever. The
central bank kept rates steady, reduced the QT pace, revised growth lower and
inflation higher, and kept the dot plot mostly unchanged.
Fed Chair Powell acknowledged
the current uncertainty around Trump’s policies and the inflation outlook but confirmed
that the economy remains healthy, and the Fed is in a good position to wait for
more clarity.
The only noteworthy comment
was the dismissal of the rise in the long-term inflation expectations in the
University of Michigan Consumer Sentiment survey as he labelled it as an
outlier given that other metrics show long term expectations stable or even slightly
lower.
On the JPY side, the BoJ
kept everything unchanged as expected with the statement acknowledging heightened
uncertainty surrounding Japan’s economy, adding a new reference to the “evolving situation regarding trade.”
This suggests that policymakers
are closely monitoring Trump’s tariff policies, with global trade developments
remaining a key risk factor for Japan’s outlook. The market continues to expect
32 bps of tightening by year-end with particular focus on inflation data as
recently we started to see some easing.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY eventually managed to pull back into the trendline where we got a rejection as
the sellers stepped in with a defined risk above the trendline to position for
a drop into the 140.00 handle. The buyers will need to see the price breaking above
the trendline to regain some control and start targeting the 160.00 handle
next.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price broke below the upward minor trendline that was defining the
bullish momentum on this timeframe. The sellers are likely to pile in around
these levels with a defined risk above the broken trendline to position for new
lows. The buyers, on the other hand, will want to see the price rising back
above the broken trendline to start targeting the break above the major
trendline.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the sellers will look to pile in as long as
the price stays below the broken trendline, while the buyers will want to see
the price rising back above the broken trendline to regain some conviction for
more upside. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims
figures, while tomorrow we conclude the week with the Japanese CPI.
This article was written by Giuseppe Dellamotta at www.forexlive.com.