USDJPY Technical Analysis – Higher Treasury yields limit the JPY gains

Fundamental Overview

The US Dollar this week has been erasing some of the losses experienced last week after the benign US PPI and the Trump’s reciprocal tariffs announcement. There hasn’t been any notable catalyst this week to support the greenback although some analysts pointed to less dovish comments from Fed’s Waller yesterday.

On the JPY side, we got the Japanese Q4 GDP this week and the data came in much higher than expected which boosted the Yen as the market increased the chances for a third rate hike by the end of the year. Today, BoJ’s Takata highlighted upside risks to inflation calling for more rate hikes although his usual stance is hawkish, so his comments weren’t surprising.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY continues to pull back from the lows reached after the benign US PPI and Trump’s reciprocal tariffs announcement. From a risk management perspective, the sellers will have a better risk to reward setup around 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 that we have a minor resistance zone around the 152.50 level. If we get a pullback into it, we can expect the sellers to step in with a defined risk above the resistance to position for a break below the 150.93 level. The buyers, on the other hand, will look for a break higher to increase the bullish bets into the trendline.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a pretty rangebound price action as we approach the resistance. On an intraday basis, if the price breaks below the most recent higher low at 151.53, then we might see the sellers extending the drop into the 150.93 level next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the FOMC Meeting Minutes. Tomorrow, we get the latest US Jobless Claims figures, while on Friday we conclude with the Japanese CPI and the US Flash PMIs.

Watch the video below