USDJPY Technical Analysis – Focus on the US CPI report

Fundamental Overview

The USD has been stronger since last Friday as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best but still pointing to strength. The jump in average hourly earnings caught the eye but that might have been distorted by the drop in average weekly hours.

We’ve also got another jump in inflation expectations in the University of Michigan Consumer Sentiment survey showing that the tariffs news is the main culprit of the recent surge in expectations.

The focus now switched to the US CPI report tomorrow where Core inflation is expected to tick lower which would be a welcome news. A lower than expected print should see the US Dollar losing ground across the board once again, while a hot reading might boost the greenback for the rest of the week.

On the JPY side, we haven’t got anything new after the strong Japanese wage data last week gave the Yen a huge boost as the market increased the bets for a potential third hike this year. The JPY is now losing some ground as higher Treasury yields are weighing on the Yen.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY started to consolidate around the lows as the market awaits the US CPI report tomorrow. From a risk management perspective, the sellers will have a much better risk to reward setup around the downward trendline to position for a drop into the 149.00 handle. The buyers, on the other hand, will want to see the price breaking above the trendline to start targeting the 160.00 handle next.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the choppy price action around the lows with the first notable resistance standing near the 154.00 handle. There’s not much we can glean from this timeframe so we need to zoom in to see some more details.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a range between the 150.95 support and the 152.42 resistance. The sellers will likely step in around the resistance to position for a drop into the support, while the buyers will look for a break higher to target the 154.00 resistance next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the Fed Chair Powell Testimony. Tomorrow, we get the US CPI report. On Thursday, we have the US PPI and the US Jobless Claims. On Friday, we conclude the week with the US Retail Sales.

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