USDJPY Technical Analysis – US Consumer Sentiment data in the spotlight

Fundamental Overview

The USD has been marginally stronger in the past couple of days as despite a softer US CPI and US PPI reports, the components that feed into the Core PCE increased the Fed’s preferred price index. In fact, the Core PCE Y/Y is now projected at 2.7% vs. 2.6% prior, while the M/M measure is seen at 0.3% vs. 0.3% prior.

On the JPY side, the data recently started to come out on the softer side and Governor Ueda recently didn’t sound like someone who’s in a hurry to raise rates amid some uncertainty. The Japanese Yen in the past couple of weeks has been supported across the board more by the risk-off sentiment and falling Treasury yields rather than domestic fundamentals.

Today we got the news that Japanese firms agreed to lower than demanded wage hikes. This didn’t change the market pricing of 31 bps of tightening by year-end as traders await more data on the inflation front to increase the expectations for another rate hike.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY failed to sustain the break above the key 148.60 level on the first try but the buyers are now trying once again. From a risk management perspective, the sellers will have a better risk to rewards setup around the trendline to position for a drop into the 140.00 handle next. The buyers, on the other hand, will want to see the price breaking above the trendline to increase the bullish bets into new highs.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, there’s not much we can glean from this timeframe but the buyers will likely continue to pile in as long as the price stays above the 148.60 level targeting the trendline. The sellers, on the other hand, will want to see the price falling back below the key level to regain control and push the price into new lows.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here as the buyers will continue to pile in above the 148.30 and 148.60 levels, while the sellers will look for a break lower to position for a drop into the 140.00 handle next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we conclude the week with the University of Michigan Consumer Sentiment report.

Watch the video below