Basic overview
USD:
The US dollar is starting to recover after a noticeable drop in late January. This rebound seems to be fueled by encouraging economic data and robust PMIs, which could hint at stronger economic activity in the near future. If this trend continues, traders may need to rethink their dovish stance on the Fed, likely causing the dollar to climb even higher.
Next week is shaping up to be significant. The US NFP report is due out on Wednesday, followed by the US CPI report on Friday. The dollar is trending bullishly, but traders are keen to see supporting data for added confidence.
JPY:
No changes are happening with the JPY. Consistent with expectations from their last meeting, the Bank of Japan maintained interest rates and slightly increased its growth and inflation outlook, thanks to expansionary fiscal policies.
Governor Ueda did not provide any new indications regarding future guidance, merely stating that interest rates would rise if the economic outlook justifies it. He mentioned that price trends in April would influence any decisions about rate hikes, suggesting that, if the data aligns, another increase could occur then.
The Japanese yen saw some gains amid discussions around “interest rate checks” and concerns over potential interventions. However, that situation seems to have faded, with traders shifting back to short selling as the dollar gains on improved indicators and anticipation of Takaichi’s success in the House elections this weekend.
USDJPY Technical Analysis – Daily Time Frame
On the daily chart, USDJPY is inching closer to the 159.00 mark. There was notable verbal intervention concerning “interest rate checks,” which triggered a swift and significant drop in USD/JPY. If the price reaches that level, sellers might come in with clear risks above the recent high, readying for a move down to the major trendline. Meanwhile, buyers will look for a breakout to raise their bullish positions, aiming for a new cycle high.
USDJPY Technical Analysis – 4 Hour Time Frame
Looking at the 4-hour chart, the price has moved above last week’s levels and is steadily rising as buyers bolster their bullish positions targeting the 159.00 area. There’s not much more insight available from this timeframe, necessitating a closer look for additional details.
USDJPY Technical Analysis – 1 Hour Time Frame
The 1-hour chart shows a small uptrend line indicating bullish momentum. Buyers will likely hover around this trendline, facing risks of descending below it while pushing for new highs. On the flip side, sellers might target a downside break, looking for a pullback to the 155.50 support. The red line indicates today’s average daily range.
Future catalyst
Today, we are expecting data on unemployment insurance claims and job openings in the US. Tomorrow, we’ll wrap up the week with the University of Michigan’s consumer sentiment report. Japan’s elections are set for the weekend, and the Liberal Democratic Party is widely anticipated to secure a victory.
