FundamentalOverview

The USD got under somepressure last Friday following the ugly University of Michigan survey whereconsumer sentiment got revised lower and long-term inflation expectationshigher. The market responded by increasing more aggressively the expectationsfor more easing from the Fed which triggered some short-term weakness in the greenback.

Today, we got some positivecomments from Trump regarding tariffs as he said that he was going to be niceon tariffs. Unfortunately, there’s been lots of noise around tariffs in thepast weeks and it’s hard to trust anything until the official unveiling of theplan tomorrow. But in the short-term, we could see some risk-on sentiment.

On the JPY side, thecurrency has been driven mainly by global events rather than domesticfundamentals as the market continues to price in around 31 bps of tightening byyear-end. The latest appreciation in the JPY was triggered by the risk-off flows lastFriday but as the sentiment started to improve, the yen gave almost everythingback.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY pulled back to retest the broke trendline and the key 148.60 level. Thebuyers stepped in there with a defined risk below the level to position for arally into the 160.00 handle. The sellers, on the other hand, will want to seethe price breaking lower to regain control and start targeting the 140.00 handlenext.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have a strong resistancearound the 151.00 handle where the price got rejected from several times in thepast months. The current price action looks like it formed the right should ofan inverted headand shoulders pattern with the 151.00 handle as the neckline.

The buyers will want to seethe price breaking above the neckline to increase the bullish bets into newhighs, while the sellers will likely step back in again there to position for adrop into new lows.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a minor counter-trendline that could turn into a bullish flag.On an intraday basis, the buyers will look for the price to break higher toincrease the bullish bets into the 151.00 handle, while the sellers will likelylean on the trendline to target another drop into the 148.60 level. The redlines define the average daily range for today.

UpcomingCatalysts

Today we get the US Job Openings and theUS ISM Manufacturing PMI. Tomorrow, we have the US ADP and the unveiling of theUS reciprocal tariffs plan. On Thursday, we get the US ISM Services PMI and thelatest US Jobless Claims figures. On Friday, we conclude the week with the USNFP report and Fed Chair Powell speech.

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