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USDJPY Technical Analysis – Risk off returns amid disappointing headlines

Fundamental Overview . The USD remains under pressure against most major currencies although the fundamental backdrop remains unclear.

FundamentalOverview

The USD remains underpressure against most major currencies although the fundamental backdropremains unclear. The most popular narrative is that everyone is selling USassets, and the greenback is losing its reserve status as a consequence of theaggressive trade war.

Such big claims aregenerally made at near term tops or bottoms, so it calls for caution. Anyway, that’s thetrend for now and we will need some catalyst to reverse it. Maybe positive newson trade negotiations front could see the market scale back the rate cutexpectations for the Fed and provide a relief rally for the greenback.

For now, we got just a couple of disappointing headlines with the US banning the sale of Nvidia chips to China and European officials suggesting that the tariffs could stay as negotiations stall. We will see how things will evolve in the next days and weeks.

On the JPY side, thecurrency has been driven mainly by global events rather than domesticfundamentals. It’s been supported more by the risk-off flows rather thaninterest rates expectations as the market doesn’t see the BoJ hiking ratesanymore this year. In fact, BoJGovernor Ueda today sounded like more tightening now is out of question andthe central bank might even resort to some easing in case things deterioratefurther.

USDJPYTechnical Analysis – Daily Timeframe

USDJPY Daily

On the daily chart, we cansee that USDJPY continues its downward trajectory towards the 140.00 handle. Ifthe price gets there, we can expect the buyers to step in with a defined riskbelow the level to position for a rally back into the major trendline. The sellers, on the other hand,will want to see the price breaking lower to increase the bearish bets into newlows.

USDJPY TechnicalAnalysis – 4 hour Timeframe

USDJPY 4 hour

On the 4 hour chart, we cansee that the price rolled back to the 142.05 low as the selling pressure returned.From a risk management perspective, the sellers will have a better risk toreward setup around the 144.56 level to position for further downside. Thebuyers, on the other hand, will want to see the price breaking above the 144.56level to start targeting a bigger pullback into the 148.25 level next.

USDJPY TechnicalAnalysis – 1 hour Timeframe

USDJPY 1 hour

On the 1 hour chart, we cansee that the recent low around the 142.00 handle has been holding up prettywell. This is where we can expect the buyers to step in with a defined riskbelow the level to position for a pullback into the 144.56 level. The sellers,on the other hand, will look for a break lower to increase the bearish betsinto the 140.00 handle next. The red lines define the average daily range for today.

UpcomingCatalysts

Today we have the US Retail Sales and FedChair Powell speaking. Tomorrow, we get the latest US Jobless Claims figures,while on Friday we conclude the week with the Japanese CPI. As a reminder, themarket is focused on tariff negotiations at the moment, so the data is not asmarket-moving as it used to be in the past months.

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