USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
- The US CPI and the US PPI beat expectations for the second consecutive month.
- The US Jobless Claims yesterday missed expectations slightly although Continuing Claims improved.
- The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
- The US Consumer Confidence missed expectations although the labour market details improved.
- The market still expects the first cut in June, but the probability stands at just 60%.
JPY
- The BoJ finally exited the negative interest rates policy as expected at the last meeting raising interest rates by 10 bps bringing the rate to a target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve control and the ETF purchases, while maintaining QE in place.
- The latest Unemployment Rate missed expectations although it continues to hover around cycle lows.
- The Japanese PMIs improved further for both the Manufacturing and Services measures although the former remains in contractionary territory.
- The Japanese wage data beat expectations by a big margin.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, came in line with expectations.
- The market expects another rate hike from the BoJ this year although the timing remains uncertain.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY continues to consolidate just beneath a crucial resistance level at 151.92. In fact, we can notice that the pair has formed a big ascending triangle and a break above the resistance could trigger a strong move to the upside. We can expect the sellers to step in around these levels with a defined risk above the resistance to position for a drop all the way back to the bottom trendline of the triangle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets and target new highs.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been ranging between the 151.00 support and the 151.92 resistance as the risk of an intervention put a lid on further gains. We got some risk off flows yesterday late in the day following the news of a possible Israel-Iran conflict that triggered a selloff into the 151.00 support where the price eventually bounced from as the buyers stepped in to fade the move and position for a break above the cycle high with a better risk to reward setup.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the break below the 151.50 zone that triggered a selloff into the 151.00 support. The buyers should keep piling in around the support to position for a rally back into the resistance targeting a breakout. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the new lows.
Upcoming Events
Today we conclude the week with the US NFP report.
