• Japan finance minister says closely watching FX moves with a great sense of urgency
• A slight breather in bond selling for now
• USD/JPY stays poised in push towards the 150 mark
• Risk mood begins to sour ahead of European trading
• ECB’s Müller says that as things stand, not expecting any more rate hikes

Markets:

• EUR leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields down 4.3 bps to 4.498%
• Gold down 0.2% to $1,910.67
• WTI crude down 0.9% to $88.90
• Bitcoin down 0.2% to $26,229

It was a quiet session for the most part, mostly due to a lack of headlines during the session.

There were no major economic releases, so market players were left to their own devices in European trading. The dollar is keeping steadier overall as equities are seen retreating again today, with sentiment continuing to be rocked by higher bond yields.

The latter was more of a factor earlier on, with 10-year Treasury yields briefly hitting 4.56% – its highest since 2007 – before keeping around 4.50% currently.

USD/JPY also nudged up to a high of 149.20 before a quick verbal pushback by Japan finance minister Suzuki saw the pair fall back to flattish levels now at 148.88 on the day.

Elsewhere, EUR/USD is sticky around 1.0600 with large option expiries at the figure level in play while AUD/USD is down near 0.6400 as the risk mood remains iffy at best, falling back after a decent showing by Wall Street yesterday.

This article was written by Justin Low at www.forexlive.com.

US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations, so the market’s pricing remained roughly the same.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also
  yesterday with the strong beat in Jobless Claims.
• The market doesn’t expect the Fed to hike again at
  the moment.

Japan:

• The BoJ kept everything unchanged as expected.
• The Japanese CPI last week showed that inflationary
  pressures remain high with the core-core reading hovering at the cycle highs.
• The Unemployment Rate surprisingly increased last month,
  although it remains near cycle lows.
• The Japanese Manufacturing PMI fell further into contraction but
  the Services PMI remains in expansion.
• BoJ governor Ueda repeated that they will not
  hesitate to take additional easing measures if needed and clarified that the
  recent comment on “quiet exit” from monetary easing was misinterpreted.
• The recent Japanese wage data showed a slowing in wage growth,
  and this is something the BoJ focuses on particularly.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that the USDJPY pair is now getting close to the 150.00 handle, which is what
many market participants have been targeting, and it’s also near the upper
bound of the rising channel. We might finally see a decent correction from
those levels, but the market will need a good catalyst to kick off the
pullback. As long as the US data remains strong and the Japanese data doesn’t
show a pick-up in wages, we might see further upside in the bigger picture.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the USDJPY has
been diverging with the
MACD for a
long time and this is generally a sign of weakening momentum often followed by
pullbacks or reversals. The price action has also formed what looks like a rising wedge, which
is a reversal pattern. The sellers are likely to step in here around the upper
bound of the wedge and target the break below the lower bound of the pattern
which is eventually likely to cause a selloff into the 145.00 support.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that in
case of a pullback, the buyers are likely to lean on the previous resistance turned
support around the 148.45 level where there’s also the confluence with
the 38.2% Fibonacci
retracement level and the 4-hour red 21 moving average. In
case of a break lower, the sellers will pile in even more targeting the lower
bound of the wedge.

Upcoming Events

Today we will see the latest US Consumer Confidence
report which surprised to the downside the last time and weighed on the USD in
the short term as Treasury yields fell. On Thursday, we will have another US
Jobless Claims data which keeps on showing strength in the labour market
maintaining the hawkish pricing in interest rates expectations. Finally, on
Friday, we will get the latest US PCE data and a few Japanese economic releases
such as the Tokyo CPI, the Unemployment Rate and Retail Sales.

This article was written by FL Contributors at www.forexlive.com.