USDJPY Technical Analysis

Last week we got many comments from various central bank speakers about the prevailing sentiment of being cautious and take a data-dependent approach to determine the extent of further tightening to avoid overdoing it. In fact, while the majority of the FOMC members expect two additional rate hikes for this year, they consistently emphasize that these decisions are contingent to the data. Last week's economic reports inclined towards a rate hike given the surprisingly strong housing market data, stable US Jobless Claims, and good US Services PMI. Naturally, the upcoming NFP and CPI reports will play a pivotal role in shaping future actions, but if we keep on getting such good data, it is likely that the market's current expectation of a rate increase by the Fed in July will materialize. On the other hand, the BoJ remains stuck with its policy easing and doesn’t look in a rush to change it despite record high core inflation data. USDJPY Technical Analysis – Daily Timeframe On the daily chart, we can see that USDJPY has eventually broke above the key 142.17 resistance where we had also the 61.8% Fibonacci retracement level for confluence. The breakout seemed inevitable as the US data remains resilient and the BoJ doesn’t want to change its policy. All else being equal, the target should now be the 150.00 handle. USDJPY Technical Analysis – 4 hour Timeframe On the 4 hour chart, we can see that the buyers have been leaning on the red 21 moving average to enter the market at every pullback. We now also have a trendline and when we’ll get another pullback, we should see the buyers again leaning on the moving average and the trendline. This is not a sellers’ market, so the only way they can play this is by waiting for the price to break below the trendlines to pile in and ride the selloffs into the next trendlines. USDJPY Technical Analysis – 1 hour Timeframe On the 1 hour chart, we can see that the price is at the previous high now. A break above should lead to more upside but from a risk management perspective, the buyers would be better off if they waited for a pullback before joining the trend again. This week's data calendar is relatively light, with only the US Jobless Claims scheduled for Thursday, followed by the US PCE on Friday. However, despite the limited data, we will hear again from many central bank speakers. This article was written by FL Contributors at www.forexlive.com.
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