USDJPY Technical Analysis – Consolidation ahead of key data | Forexlive

Fundamental
Overview

The USD continues to remain
supported since the last FOMC decision as the market perceived it as more
hawkish than expected. After the rally during the low volume Christmas holidays,
we are seeing a pullback pretty much across the board.

The market’s pricing didn’t
change much with roughly two rate cuts priced in for this year, which is in
line with the Fed’s projections. The central bank has switched its focus back
to inflation, so the next US CPI report should have a bigger influence on
interest rates expectations than the US NFP this Friday (barring big deviations).

On the JPY side, the BoJ
left interest rates unchanged as expected at the last policy meeting but
Governor Ueda delivered a less hawkish than expected presser.

In fact, he placed a great
deal on wage data to decide on the timing of the next
rate hike and added that the trend will become clearer in March or April. This
made the market to price out the probabilities for a hike in January and push back once again to the
next meeting which is scheduled for March.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY is consolidating around the recent highs with the 158.00 handle
acting as resistance.
From a risk management perspective, the buyers will have a better risk to
reward setup around the major trendline,
while the sellers will look for a break below the trendline to extend the drop
into the 149.00 handle next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action between the 156.00 support and the
158.00 resistance. This week we have some key economic data, so the market participants
will likely play the range until we get a breakout on either side to position
for the next impulse.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much else we can add here as the price remains confined in the range and we
just wait for a breakout. The red lines define the average daily range for today.

Upcoming
Catalysts

Today, we get the US ISM Services PMI and the US Job Openings data. Tomorrow,
we have the US ADP and the FOMC Meeting Minutes. On Thursday, we get the
Japanese wage data and the latest US Jobless Claims figures. On Friday, we
conclude the week with the US NFP report.

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