USD
- The Fed left interest rates unchanged as expected 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.
- Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
- The US CPI and the US PPI beat expectations for the second consecutive month.
- The US Jobless Claims beat expectations across the board.
- The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though.
- The market expects the first rate cut in June.
JPY
- The BoJ finally exited the negative interest rates policy as expected raising interest rates by 10 bps bringing the rate to a target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve control and the ETF purchases, while maintaining QE in place as expected.
- The latest Unemployment Rate remained unchanged hovering around cycle lows.
- The Japanese PMIs improved further for both the Manufacturing and Services measures although the former remains in contractionary territory.
- The Japanese wage data beat expectations by a big margin which then led to the rate hike from the BoJ.
- The Japanese CPI came in line with expectations.
- 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 is trading just beneath a crucial resistance level at 151.92. In fact, we can notice that the pair has formed a big ascending triangle and a break above the resistance could trigger a strong move to the upside. We can expect the sellers to step in around these levels with a defined risk above the resistance to position for a drop all the way back to the bottom trendline of the triangle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets and target new highs.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a trendline defining the current uptrend where we can also find the confluence with the red 21 moving average. If we get a pullback into the trendline, we can expect the buyers to step in with a defined risk below it to position for a break above the resistance with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into new lows.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we also have two key Fibonacci retracement levels adding some extra confluence for the buyers. We can also notice that the price action might be forming two different chart patterns: a double top at the resistance and another ascending triangle defined by the trendline. This should make a breakout on either side even more important and will likely trigger a strong reaction.
