USDJPY Technical Analysis – The risk sentiment remains fragile

Fundamental Overview

The USD gained ground across the board last week amid risk-off flows and renewed tariffs fears. In fact, we got some weak US data coupled with new cycle highs in inflation expectations.

This is something to keep in mind in light of the next NFP and CPI reports coming out before the March FOMC decision where we will also get the updated SEP and Dot Plot. Moreover, last Thursday, Trump repeated that tariffs on Mexico and Canada will go into effect on March 4^th as planned and that he will impose additional 10% tariffs on China.

On the JPY side, nothing has changed fundamentally but the Japanese Yen has been supported across the board by the risk-off sentiment and falling Treasury yields. Last Friday, the JPY weakened as the Tokyo CPI missed expectations and saw the market paring back the bets for a third rate hike by the end of the year.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY eventually bounced from the 148.60 level and pulled back into the 150.93 resistance. This is where we can expect the sellers to step in with a defined risk above the resistance to position for the break below the 148.60 level. The buyers, on the other hand, will look for a break higher to extend the pullback into the trendline where they will target a break above it.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the pullback into the resistance with some rangebound price action now. There’s not much else we can add here as the sellers will likely pile in for a drop back into the 148.60 level, while the buyers will look for a break higher to extend the rally into the major trendline.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor support zone around the 150.18 level where the price got rejected from several times in the past days. This is where we can expect the buyers to step in to position for the break above the resistance, while the sellers will look for a break lower to increase the bearish bets into the 148.60 level next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US ISM Manufacturing PMI. Tomorrow, we have the Trump’s tariffs deadline for Mexico, Canada and China. On Wednesday, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report.

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