USDJPY Technical Analysis – We are testing some key levels

Fundamental Overview

The USD got a boost across the board yesterday following the higher than expected US CPI report. The greenback couldn’t extend into new highs though as the market was aware of the “January-effect” and therefore didn’t put much weight on this particular release.

What weigh more on the market were the positive headlines on the reciprocal tariffs as the White House adviser Hassett said that the reciprocal tariffs were a work in progress and conversations with other countries began earlier that day, potentially implying negotiations.

Moreover, we got a very positive post from Trump saying that he had a call with Putin and the tone of it was upbeat on a peace deal in the Russia-Ukraine war. He was even invited to Moscow. That helped the risk sentiment and weighed on crude oil (less inflationary pressures).

On the JPY side, we got the Japanese PPI today and the data came in higher than expected. The Yen has been dragged lower recently though by the rally in Treasury yields as the Japanese data hasn’t been the market focus.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY is now testing the downward trendline. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the 149.00 handle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 160.00 handle next.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see the spike into the trendline following the hot US CPI report. The sellers started to pile in around the trendline and will want to see the price breaking below the 153.70 support to gain more conviction and increase the bearish bets into new lows. The buyers, on the other hand, will likely step in around the support to position for the break above the trendline and a rally into new highs.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers are leaning on it to push into new highs, and a break above the counter-trendline would likely give them more conviction to increase the bullish bets. The sellers, on the other hand, will likely continue to pile in around these levels and increase the bearish bets on the break below the support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US PPI, the latest US Jobless Claims figures and the Trump’s reciprocal tariffs announcement. Tomorrow, we conclude the week with the US Retail Sales data.