USDJPY Technical Analysis

USDJPY Technical Analysis

USDThe Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle. The Summary of Economic Projections showed a downward revision to Growth and Core PCE in 2024 while the Unemployment Rate was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts in 2024 compared to just two in the last projection. Fed Chair Powell didn't push back against the strong dovish pricing and even said that they are focused on not making the mistake of holding rates high for too long.The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data. The US PPI missed expectations across the board supporting the disinflationary impulse.The labour market continues to soften although Initial Claims keep on hovering around cycle lows while Continuing Claims are ranging at a higher level. The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin. The hawkish Fed members have been leaning on a more neutral side lately.The market expects the Fed to start cutting rates in March.JPYThe BoJ kept its monetary policy unchanged at the last meeting with interest rates at 0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap. Governor Ueda repeated once again that they won’t hesitate to take easing measures if needed and that they are not foreseeing sustainable price increases unless wage growth picks up. The latest Japanese CPIshowed that inflationary pressures are easing although they remain well above the BoJ’s 2% target.The latest Unemployment Rate remained unchanged near cycle lows.The Japanese Manufacturing PMI fell further into contraction but the Services PMI ticked higher remaining in expansion.The latest Japanese wage data missed expectations by a big margin and as a reminder the BoJ is focusing on wage growth to decide whether to tweak its monetary policy.The Tokyo CPI, which is seen as leading indicator for National CPI, eased further but the Core Core measure remains stuck at cycle highs. The market expects the BoJ to hike in April.USDJPY Technical Analysis – Daily TimeframeOn the daily chart, we can see that USDJPY is approaching again the resistance zone around the 146.60 level where we can also find the 50% Fibonacci retracement level for confluence. This is where we can expect the sellers to step in again with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the 150.00 handle. USDJPY Technical Analysis – 4 hour TimeframeOn the 4 hour chart, we can see that the price is forming what looks like a rising wedge right into the key resistance. This is a reversal pattern and should give the sellers even more conviction for a downside move. Moreover, we can notice that the price is diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we should see at least a pullback into the lower bound of the wedge. USDJPY Technical Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that we have another minor trendline defining the uptrend on this timeframe. The buyers might lean on the trendline where they will also have the 21 moving average for confluence. If the price were to break lower, the sellers will likely pile in to position for a drop into the lower bound of the wedge expecting a breakout. Upcoming EventsToday, all eyes will be on Fed's Waller as the market will be eager to see if he decides to pushback against the aggressive rate cuts expectations. Tomorrow, we will get the US Retail Sales report while on Thursday we will see the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the Japanese CPI and the University of Michigan Consumer Sentiment survey.See the video below This article was written by FL Contributors at www.forexlive.com.