USDJPY Technical Analysis – Focus on BoJ and FOMC

The USD/JPY currency pair is once again approaching key resistance as focus shifts to the Bank of Japan and FOMC decisions.

Fundamental Overview

The US dollar regained ground in the latter part of last week, although we do not have a meaningful catalyst for the move. Overall, we remain hesitant as the market waits for something new for the next sustainable trend.Given that “short US dollar” is now the busiest trade, it will take something meaningful to make the market expect more rate cuts than are currently in place.

As for the Japanese yen, last week’s Tokyo consumer price index data came in lower than expected and did not help the yen as a rate hike by the end of the year was already priced in following the US-Japan trade deal. For a larger appreciation, we would probably need weak data from the US to increase dovish bets on the Federal Reserve, or higher inflation data in Japan to bet on more rate hikes than currently expected.

Keep an eye on policy developments as news of more fiscal support will make the market expect stronger economic activity and therefore a higher chance of more rate hikes. This week we also have the BoJ and FOMC decisions and deviations from expectations could trigger some good moves.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY is once again approaching the key resistance at 148.30. Sellers will likely bypass the resistance with some risk above it to position themselves for a drop back to the support at 142.35. Buyers, on the other hand, will look for a breakout to the upside to increase their bullish bets towards the next resistance at 151.20.

USDJPY Technical Analysis – 4-Hour Time Frame

On the 4-hour chart, we see that we have a small support area around the 147.00 level. If the price reaches this point, we can expect buyers to enter with some risk below the support level to position themselves for a rally back to the resistance level, aiming for a breakout. Sellers, on the other hand, will look for a breakout below to increase their bearish bets to the 142.35 level.

USDJPY Technical Analysis – 1-Hour Time Frame

On the hourly chart, we see that we have an ascending trendline defining bullish momentum in this timeframe. Buyers will likely continue to target the trendline with some risk below it to target new highs, while sellers will look for a breakout to the downside to target the 147.00 support and new lows. The red lines define the average daily range for today.

Upcoming catalysts

Tomorrow we have data on US job openings and consumer confidence. On Wednesday we have data on US GDP, US GDP for the second quarter and the FOMC (Federal Open Market Committee) decision on interest rates. On Thursday we will have the BoJ (Bank of Japan) decision, the US PCE price index, US jobless claims and the US employment cost index. Finally, on Friday we will finish the week with the US NFP report and the US manufacturing PMI (ISM).