FundamentalOverview

The USD appreciated alittle the day after the FOMC decision although it seemed more like a technicalpullback as the central bank didn’t offer anything new. In fact, the Fed justdelivered on expectations keeping rates steady, reducing the QT pace, revisinggrowth lower and inflation higher, and keeping the dot plot mostly unchanged.

Fed Chair Powell just acknowledgedthe current uncertainty around Trump’s policies and the inflation outlook butconfirmed that the economy remains healthy, and the Fed is in a good positionto wait for more clarity. The market is pricing around 69 bps of easing byyear-end.

On the JPY side, the BoJkept everything unchanged as expected with the statement acknowledging heighteneduncertainty surrounding Japan’s economy, adding a new reference to the"evolving situation regarding trade."

This suggests that policymakersare closely monitoring Trump’s tariff policies, with global trade developmentsremaining a key risk factor for Japan's outlook. The market continues to expect33 bps of tightening by year-end with particular focus on inflation data.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY is testing the major trendline. This is where we can expect thesellers to step in with a defined risk above the trendline to position for adrop into the 140.00 handle. The buyers, on the other hand, will look for abreak higher to start targeting the 160.00 handle next.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee more clearly the bearish setup around the trendline that may end up in a doubletop at this strong resistancezone around the 150.00 handle. The sellers will likely pile in around theselevels with a defined risk above the trendline, while the buyers will need to seea break higher to gain more conviction for further upside.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the sellers will look for a rejection around theselevels, while the buyers will look for a break higher. A break below the upwardtrendline and the neckline of the potential double top at 148.18 will likelyincrease the bearish momentum. The red lines define the average daily range for today.

UpcomingCatalysts

Today we get the US Flash PMIs. Tomorrow,we have the US Consumer Confidence report. On Thursday, we get the latest USJobless Claims figures. On Friday, we conclude the week with the Tokyo CPI andthe US PCE report.

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