USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no
change to the statement. The Dot Plot still showed three rate cuts for 2024 and
the economic projections were upgraded with growth and inflation higher and the
unemployment rate lower. - The US Q1 GDP
surprisingly missed expectations although the core components showed a strong
economy, nonetheless. The Core PCE though surprised to the upside pushing rate
cuts further away. - The US CPI beat expectations for the third
consecutive month, while the US PPI came in line with forecasts. - The US NFP beat expectations across the board
although the average hourly earnings came in line with forecasts. - The US PMIs missed expectations in April with the
commentary citing lower inflationary pressures but also increased layoffs. - The market expects the first rate cut in
September.
JPY
- The BoJ left interest rates unchanged as expected with no other major
change. - The latest Unemployment Rate missed expectations although it
continues to hover around cycle lows. - The Japanese PMIs improved further for both the
Manufacturing and Services measures although the former remains in
contractionary territory. - The latest Japanese wage data came in line with expectations.
- The Tokyo CPI, which is considered a leading
indicator for National CPI, missed expectations across the board by a big
margin although it was attributed to a one-off factor. - The market expects another rate hike
from the BoJ this year although the timing remains uncertain.
USDJPY Technical Analysis –
Daily Timeframe
On the daily chart, we can see
that USDJPY eventually managed to break through the key 155.00 handle and
extended the rally into new highs as the Japanese officials continue to refrain
from an intervention given the strong fundamentals against the Yen. From a risk
management perspective, it’s worth to keep an eye on the trendline around
the 151.92 level where we can also find the 50.0% Fibonacci retracement level
for confluence. If the
price gets there at some point, we can expect the buyers to step in with a
defined risk below the trendline to position for a rally into new highs. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the next major trendline around the 146.00
handle.
USDJPY
Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is
starting to diverge with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for a pullback into the minor
trendline around the previous resistance now turned support at
155.00. That’s where the buyers will look to buy the dip with a defined risk
below the trendline to position for a rally into the 160.00 handle. The
sellers, on the other hand, will want to see the price breaking lower to
position for a drop into the 151.92 support zone.
USDJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see more
closely the recent price action with the spike higher following the unchanged
BoJ policy decision and Governor Ueda’s comments. The first opportunity to buy
the dip will come around another minor trendline where we have also the 61.8%
Fibonacci retracement level for confluence. The sellers, on the other hand,
will look for a break lower to position for a drop into the next trendline
around the 154.60 level.
Upcoming Events
Today we conclude the week with the US PCE report.
This article was written by FL Contributors at www.forexlive.com.
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