Fundamental Overview
The USD has been unusually resilient this week despite lots of negative catalysts. The
US PPI and
Core CPI came in on the softer side which saw the market increasing the easing expectations from 24 bps before the data to 37 bps after.
Moreover, yesterday
Fed’s Waller delivered some surprisingly dovish comments saying that a rate cut could come in the first half of this year if the inflation data continues to show improvement and that a March cut cannot be completely ruled out.
The market pricing increased to 42 bps by year end as a result which is now much closer to the 50 bps projected by the Fed.
On the JPY side,
BoJ’s Ueda said this week that the central bank will debate whether to raise interest rates next week which gave the yen a boost as the market increased the probabilities for a rate hike next week to 78%.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY broke out of the consolidation following all the JPY positive news. From a risk management perspective, the buyers will have a better risk to reward setup around the major
trendline to position for a rally into the 160.00 handle. The sellers, on the other hand, 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 breakout of the range with the price now potentially coming back to retest the
support turned resistance. The sellers will likely keep on piling in around these levels with a defined risk above the resistance to position for the drop into the major trendline. The buyers, on the other hand, will want to see the price breaking higher to start targeting the 158.00 level again.
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 for a rejection from the current levels, while the buyers will look for a rally back above the 156.00 level to position for a move back into the 158.00 level next. The red lines define the
average daily range for today.
Upcoming Catalysts
Today, we have the US Housing Starts and Building Permits, and the US Industrial Production and Capacity Utilization.
Watch the video below
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
