USDJPY Technical Analysis – JPY strength resumes as Treasury yields fall
. Fundamental Overview . The US Dollar this week has been erasing some of the losses experienced last week after the benign US PPI and the Trump’s reciprocal tariffs announcement.
FundamentalOverview
The US Dollar this week hasbeen erasing some of the losses experienced last week after the benign US PPIand the Trump’s reciprocal tariffs announcement. There hasn’t been any notablecatalyst this week to support the greenback although some analysts pointed toless dovish comments from Fed’s Waller on Tuesday which would explain the risein Treasury yields that followed afterwards.
Yesterday, during the Asiansession we got some positive headlines on the tariffs side as Trump said that anew trade deal with China was possible. That weakened the US Dollar whichcontinued to depreciate throughout the European and US sessions.
On the JPY side, we got theJapaneseCPI report today which saw another uptick in Core inflation, which is whatthe BoJ is focused on. The Tokyo CPI released a couple of weeks before theNational CPI is generally the one that moves the market as it leads the JapaneseCPI figures. The market continues to fully price in the next rate hike in Septemberwith a total of 35 bps of tightening expected by year-end.
USDJPYTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that USDJPY broke below the 150.93 low and extended the drop below the150.00 handle before pulling back a bit. The price is now coming back to retestthe 150.93 level. This is where we can expect the sellers to step in with adefined risk above the level to position for the drop into the 148.60 levelnext. The buyers, on the other hand, will look for a break higher to extend thepullback into the major trendline.
USDJPY TechnicalAnalysis – 4 hour Timeframe
On the 4 hour chart, we cansee that we have a minor downward trendline defining the current bearishmomentum. The sellers will likely lean on the trendline with a defined riskabove it to keep pushing into new lows. The buyers, on the other hand, willlook for a break higher to pile in for a rally into the major trendline next.
USDJPY TechnicalAnalysis – 1 hour Timeframe
On the 1 hour chart, there’snot much we can add here as the sellers will look for a rejection from thetrendline, while the buyers will look for a break higher to extend the pullbackinto the next major trendline. The red lines define the average daily range for today.
UpcomingCatalysts
Today we conclude the week with the USFlash PMIs.
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