This is in part what is helping to keep the dollar from breaking down further earlier today. The greenback is now trading more mixed but keeping largely steadier against the European currencies. EUR/USD was up to 1.0915 earlier but now down to 1.0870 while USD/CHF is up to 0.8690 after having traded to a low of 0.8650 earlier today.

USD/JPY is still down 0.2% to 147.77 but that owes more to the post-BOJ reaction, after Ueda’s more hawkish tone. Meanwhile, the antipodeans are barely hanging on to its early gains with AUD/USD up 0.2% to 0.6585 but that is down from a high of 0.6612 earlier. The aussie and kiwi were bolstered in Asia trading after China is reportedly planning a ¥1 trillion backstop for the stock market here.

Going back to the bond market, there is still some pushing and pulling going on as seen in the chart above. 10-year yields are bouncing back today after the drop yesterday, after having leaned against its 200-day moving average (blue line) at 4.094%. That remains the key technical level to watch in gauging sentiment for this week.

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

• The Fed left interest rates unchanged as expected at the last meeting with a shift in
  the statement that indicated the end of the tightening cycle.
• The latest US CPI slightly beat expectations but analysts
  expect the Core PCE to print at 0.2% M/M again following the CPI data.
• The labour market continues to soften but remains
  resilient with US Jobless Claims beating expectations week after week.
• The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
• The US Retail Sales beat expectations across the board.
• The University of Michigan Consumer Sentiment report jumped to the highest levels since
  2021.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market’s expectations for the first rate cut
  were pushed back to May following strong economic data.

CAD

• The BoC kept the interest rate steady at
  5.00% as expected at the last meeting with
  the usual caveat that it’s prepared to raise the policy rate further if needed.
• The latest Canadian CPI beat expectations across the board with
  the underlying inflation measures remaining elevated, which should give the BoC
  a reason to wait for more data before considering rate cuts.
• On the labour market side, the latest report missed
  expectations although wage growth spiked to the highest level since 2021.
• The Canadian PMIs continue to fall
  further into contraction as the economy keeps on weakening amid restrictive
  monetary policy.
• The market expects the BoC to start
  cutting rates in Q2.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD broke
through the key trendline and
extended the rally into the 1.35 handle. This breakout opened the door for a
move into the swing high resistance around
the 1.36 handle where we can also find the 61.8% Fibonacci retracement level
for confluence. The
buyers should keep on looking for dip-buying opportunities on the lower
timeframes while the sellers will want to see the momentum changing and some
key breaks before piling in more aggressively.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
broke through the key upward trendline but bounced from the 61.8% Fibonacci
retracement level. If the price were to make a new higher high, then the
fakeout would be confirmed and the buyers will likely pile in more aggressively
to target the 1.36 handle.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the price
got rejected from the downward trendline as the sellers stepped in to position
for a drop into new lower lows. The bearish momentum looks weak though and we
could see a break above the trendline which would see the buyers increasing
their bullish bets into the 1.36 resistance.

Upcoming Events

This week is a bit more tranquil on the data front with
the major releases scheduled for the final part of the week. We begin tomorrow
with the BoC rate decision and the US PMIs. On Thursday, we have the Advance US
Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude
the week with the US PCE report.

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

The low earlier hit 146.97 on BOJ governor Ueda’s press conference but the pair is now trading near 147.85 on the day. Besides a move higher in bond yields, there’s not much else driving the rebound in USD/JPY. The earlier dip is largely driven by flows in the heat of the moment, as Ueda did change up his tone today.

In the bigger picture though, USD/JPY looks to be moving back up as traders reconsider a break under the 100-day moving average (red line) at 147.50. That remains the key technical level to watch in the sessions ahead, in making sense of the price momentum in the pair.

As for the BOJ today, what exactly is the takeaway for traders?

No policy change as expected

The central bank leaving policy unchanged was widely expected, even more so after the earthquakes in Western Japan. They chose to maintain the status quo, making it a consistent message that they are waiting on the spring wage negotiations before pursuing any action. So, there wasn’t much to really scrutinise on this I would say.

Ueda with a bolder message in the press conference

You can already sense a different tone from Ueda today just by the headlines alone:

• BOJ governor Ueda: Likelihood of achieving 2% inflation target is gradually rising
• BOJ’s Ueda says have heard encouraging comments from big firms on wage hikes
• Our confidence has grown in the achievement of price target – Ueda
• BOJ’s Ueda: More firms have decided on wage hikes this year compared to last year

It certainly looks like he is teeing up a potential policy change in the months ahead, with April being the likely pivot point. Policymakers have kept alluding to the results of the spring wage negotiations before making any moves and that is what markets are anticipating right now.

All that being said, do remember that all of this talk was supposed to be narrative for the BOJ last year already. Instead, here we are talking about finally reaching that last step one year later. Ueda’s remarks today certainly lays out the groundwork for that but will the central bank really follow through?

They have a knack for disappointing markets on many occasions over the last one year and I fear that they might have an excuse to do so again in the months ahead.

If the price action in the Japanese yen today is any indication, it is that traders are growing tired of getting bluffed by the BOJ at this stage.

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

• The Fed left interest rates unchanged as expected at the last meeting with a shift in
  the statement that indicated the end of the tightening cycle.
• The latest US CPI slightly beat expectations but analysts
  expect the Core PCE to print at 0.2% M/M again following the CPI data.
• The labour market continues to soften but remains
  resilient with US Jobless Claims beating expectations week after week.
• The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
• The US Retail Sales beat expectations across the board.
• The University of Michigan Consumer Sentiment report jumped to the highest levels since
  2021.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market’s expectations for the first rate cut
  were pushed back to May following strong economic data.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  with no dovish language as they reaffirmed that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• The last UK PMIs showed the Manufacturing sector falling
  further into contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in Q2.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD bounced
on the key support around
the 1.2610 level and rallied into the 1.2750 level as the buyers piled in to
target the 1.28 handle. There’s not much to glean from this timeframe as the
price trades right in the middle of the range, so we need to zoom in to see
some more details.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been rising tentatively as both the currencies remain relatively strong. We can
see that we have a trendline where
there’s also the red 21 moving average for confluence. This is
where the buyers should lean onto to position for a continuation of the rally
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 position
for a drop back into the 1.26 handle.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD for
quite some time. This is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, it should point to a pullback into the
trendline where the buyers will have the opportunity to increase their bullish
bets with a better risk to reward setup. Conversely, if the price were to break
below the trendline a reversal would be confirmed, and the sellers will pile in
to target a drop back into the 1.26 support.

Upcoming Events

This week is a bit more tranquil on the data front with
the major releases scheduled for the final part of the week. We begin tomorrow
with the UK and the US PMIs. On Thursday, we have the Advance US Q4 GDP and the
latest US Jobless Claims figures. Finally, on Friday we conclude the week with
the US PCE report.

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