USDJPY Technical Analysis – BoJ and FOMC in focus

Fundamental
Overview

The USD regained some
ground in the final part of last week although we haven’t got any meaningful catalyst
for the move. Overall, we continue to range as the market is waiting for
something new for the next sustained trend. Given that the “short US dollar” is
now the most crowded trade, it will take something meaningful to lead the
market to expect more rate cuts than currently priced in.

On the JPY side, the Tokyo CPI figures last week came out lower
than expected and didn’t help the JPY as a rate hike by year-end got already
priced in after the US-Japan trade deal. For more appreciation we will likely
need weak US data to increase the dovish bets on the Fed or higher inflation
figures for Japan to price in more rate hikes than currently expected.

Keep an eye on the
political shifts as news of more fiscal support will lead the market to expect
stronger economic activity and therefore higher chances of more rate hikes.
This week we have also the BoJ and FOMC decisions and deviations from the
expectations could trigger some nice moves.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY is now approaching again the key 148.30 resistance. The sellers will likely step in
around the resistance with a defined risk above it to position for a drop back into
the 142.35 support. The buyers, on the other hand, will look for a break higher
to increase the bullish bets into the 151.20 resistance next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor support zone around the 147.00 handle. If the price
gets there, we can expect the buyers to step in with a defined risk below the
support to position for a rally back into the resistance targeting a breakout.
The sellers, on the other hand, will look for a break lower to increase the
bearish bets into the 142.35 level next.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have an upward trendline defining the bullish momentum on this
timeframe. The buyers will likely continue to lean on the trendline with a
defined risk below it to keep targeting new highs, while the sellers will look
for a break lower to target the 147.00 support and new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the get US Job Openings and
Consumer Confidence data. On Wednesday, we have the US ADP, the US Q2 GDP and
the FOMC rate decision. On Thursday, we have the BoJ rate decision, the US PCE
price index, the US Jobless Claims and the US Employment Cost Index. Finally,
on Friday, we conclude the week with the US NFP report and the US ISM Manufacturing
PMI.

Watch the video below

This article was written by Giuseppe Dellamotta at investinglive.com.