USDJPY Technical Analysis – Will the Fed push back against the dovish pricing? | Forexlive

Fundamental
Overview

The USD came under pressure
again this week as some disappointing headlines on the tariffs front hit the
sentiment. The de-escalation continues though and tonight we got the news that
the US and Chinese representatives will meet in Switzerland in the coming days
to start engaging in discussions.

Today, we also have the
FOMC policy decision where the Fed is expected to keep interest rates unchanged
and could push back against the dovish market pricing giving the greenback a boost
in the short term.

On the JPY side, the
currency has been driven mainly by global events rather than domestic
fundamentals. Alongside the Swiss Franc, it’s been the favoured safe haven in
the currencies space amid the swings in risk sentiment. On the monetary policy
front, the BoJ kept interest rates unchanged as expected and
delivered a dovish message.

This was then echoed by BoJ
Governor Ueda which placed a great deal on trade developments. In summary, the
central bank is likely to go faster on rate hikes in case we get a good trade
deal and delay rate adjustments in case the trade deal disappoints.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY erased most of last week’s gains in the past couple of days and
threatens to extend the bearish move into the 140.00 handle. From a risk
management perspective though, the sellers will have a better risk to reward
setup around the major trendline to position for further
downside, while the buyers will look for a break higher to increase the bullish
bets into the 151.00 handle next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we broke below the strong support zone around the 144.00 handle where we had
also the upward minor trendline for confluence. The sellers piled in with more
conviction on the break to target the 142.00 handle next. The buyers, on the
other hand, will likely step in around the 142.00 handle to position for a
rally back into new highs.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the bearish momentum on
this timeframe. The sellers will likely continue to lean on the trendline to
keep pushing into new lows, while the buyers will look for a break higher to pile
in for a rally into the major trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today, we have the FOMC Rate Decision. Tomorrow, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the
Japanese wage data.

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