USDJPY Technical Analysis

The USDJPY pair pulls back into a key resistance level following strong US data. What’s next?

FL Contributors

Friday, 15/03/2024 | 08:14 GMT-0

USD

The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
The US CPI and the US PPI beat expectations for the second consecutive month.
The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably. Moreover, the US Jobless Claims yesterday beat expectations across the board with a big positive revision to Continuing Claims.
The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
The US Retail Sales missed expectations across the board although the data improved from the prior month.
The market expects the first rate cut in June.

JPY

The BoJ kept its monetary policy unchanged as expected at the last meeting with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
The last Japanese CPI beat expectations although all measures eased further from the prior readings.
The latest Unemployment Rate remained unchanged hovering around cycle lows.
The Japanese PMIs improved for both the Manufacturing and Services measures although the former remains in contractionary territory.
The Japanese wage data beat expectations by a big margin raising the odds of an earlier than expected BoJ exit from negative rates.
The Tokyo CPI, which is seen as a leading indicator for National CPI, recently came in line with expectations with the measures increasing from the prior report.
The market sees a 50/50 chance that the BoJ hikes rates in March.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY bounced on the key 146.60 level and pulled back into the 148.80 level following strong US data releases. We can notice that we have also the confluence of the 50% Fibonacci retracement level and red 21 moving average around this level. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally back into the highs.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a counter-trendline where we can find the confluence with the 61.8% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a break above the 148.80 level with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into new lows.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more closely the recent price action with all the key levels marked on the chart. There’s not much else to do here other than waiting for the setups to work out.