<p style=““ class=“text-align-justify“>That said, they still do see a recession being the base case scenario for the US economy as opposed to a soft landing. The call comes after the US inflation numbers yesterday, which does allow for the argument that the Fed may need to tighten monetary policy further in the coming months.</p>

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

<p>On the daily chart below, we can
see that the price has been trading in a falling channel for a quarter now. The
USD lost ground on the back of falling <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ class=“terms__main-term“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa“ target=“_blank“>inflation</a> and rate cuts being priced for
this year. </p><p>Recently things changed as the
blockbuster <a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“>NFP</a> report yet again showed an
extremely tight labour market and the <a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“>ISM
Services PMI</a> jump back into expansion triggered a repricing of
rates expectations. We can also see that the channel is <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>diverging</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a>. </p><p>Generally, this loss of momentum
triggers a pullback to the nearest support/resistance or <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> before another leg lower/higher.
</p><p>In fact, the price pulled back to
the top of the channel and if we see it breaking up, then a much bigger
correction may kick in with the price possibly rallying all the way back up to
0.96 and the 50% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level. </p><p>On the 4 hour chart below, we can
see that after reaching the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a>, the price pulled back to the
50/61.8% Fibonacci retracement area. The price bounced there as the <a target=“_blank“ href=“https://www.forexlive.com/news/us-january-cpi-64-yy-vs-62-expected-20230214/“>US
CPI report</a> yesterday showed that the disinflationary trend is
slowing and the M/M inflation rate is still too high. </p><p>In fact, <a target=“_blank“ href=“https://www.forexlive.com/centralbank/december-fed-funds-pricing-hits-5-20230214/“>the
market repriced</a> future interest rates expectations with the
terminal rate moving up a bit and rate cuts being priced out. The range now is
clear: get above the resistance at 0.9287 and the breakout is confirmed with
further upside expected, get below the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> at 0.9150 and the sellers will
start to target the low at 0.9050.</p><p>On the 1 hour chart below, we can
see that the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> are now pointing north and the price is right at the upper bound of the
channel. Today we have the <a target=“_blank“ href=“https://www.forexlive.com/news/why-wednesdays-us-retail-sales-report-could-be-stronger-than-expected-20230214/“>US
Retail Sales</a> report, which is expected to be positive. A beat
to the expectations should give us the breakout higher, while a miss should
give us another pullback to the support zone at 0.9150. </p>

This article was written by ForexLive at www.forexlive.com.

<p>On the daily chart below, we can
that there’s a possible <a target=“_blank“ href=“https://www.forexlive.com/Education/chart-patterns-guide-20220125/“>double
top pattern</a> with the high at 0.6514 and the neckline at
0.6191. If the price falls below the neckline, the pattern should be confirmed
and the measured target would be in the 0.5900 area. </p><p>The <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>divergence</a> between the second top and the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a> is also an extra signal of weak
upside momentum and it strengthens the pattern. </p><p>The <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> are pointing to further downside movement as the blue short period
moving average is below the red long period moving average. As things stand,
the price should at least get to the neckline.</p><p>On the 4 hour chart below, we can
see a ranging price action as traders are trying to decide if we get to a soft
landing where inflation is falling and the labour market remains resilient and
one where inflation doesn’t come down to the Fed’s 2% target requiring higher
rates and eventually a hard landing. </p><p>Yesterday’s <a target=“_blank“ href=“https://www.forexlive.com/news/us-january-cpi-64-yy-vs-62-expected-20230214/“>CPI</a> report came out basically as
expected and we just saw pure choppiness, but the M/M readings are too high to
hope for a return to the Fed’s target. In fact, the market <a target=“_blank“ href=“https://www.forexlive.com/centralbank/december-fed-funds-pricing-hits-5-20230214/“>priced
out cuts</a> this year and the terminal rate is now seen a bit higher than what the
Fed has projected in December. </p><p>Nevertheless, the sellers will
need to firmly break the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> at 0.6270 to extend the move to
the neckline or lower. The buyers will need to get above the 0.6413 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> as that would be the last line
of defence for sellers.</p><p>On the 1 hour chart below, we can
see more closely the range that’s been going on for over a week now. The 38.2% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level found sellers and there’s also a much
stronger level at 0.6413 where we have a previous swing resistance and the 50%
Fibonacci level. </p><p>For now, the sellers are in
control and today’s <a target=“_blank“ href=“https://www.forexlive.com/news/why-wednesdays-us-retail-sales-report-could-be-stronger-than-expected-20230214/“>Retail
Sales</a> report will probably yield some movement. </p><p>If the data beats expectations,
we may see more downside in the pair as it’s more likely that the market is now
considering good news as bad news due to a possible higher terminal rate. On
the other hand, a miss may get us back into the range. </p>

This article was written by ForexLive at www.forexlive.com.

<p>On the daily chart below, we can
see that long falling channel has been broken after the strong <a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“>NFP</a> report and the price is now
targeting the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> at 134.50. The <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> are now pointing north and the red long period moving average acted as <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> for the pullback. </p><p>We can also see that the entire
channel was <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>diverging</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a> and given the current repricing
in interest rates expectations we may see a big correction all the way up to
the 142.17 level where we can also find confluence with the 61.8% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci</a> level. The upcoming economic
data will drive the ebb and flow of the market.</p><p>On the 4 hour chart below, we can
see that after breaking out of the channel, the price pulled back to the
nearest swing support level at 130.53 where we had also the 50% Fibonacci
retracement level for further <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-confluence-20220318/“>confluence</a>. </p><p>We can see that there was also a
spike lower to the 61.8% Fibonacci retracement and the 130.00 level. That was a
kneejerk reaction to a <a target=“_blank“ href=“https://www.forexlive.com/centralbank/japan-government-reportedly-likely-to-nominate-kazuo-ueda-as-new-boj-governor-20230210/“>report</a> that Kazuo Ueda will be the next
BoJ governor. </p><p>This is because in the past Ueda
had hawkish comments on BoJ policy, and some short term traders/algos
interpreted that as a sign for an upcoming change in monetary policy. </p><p>The USD/JPY is mainly driven by <a target=“_blank“ href=“https://www.tradingview.com/symbols/TVC-US10Y/“>US long term yields</a> though and those have been
surging as the market repriced interest rates expectations. The next target
looks to be the resistance at 134.50 where we can also find the 127.2% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-utilizing-fibonacci-extensions-20220422/“>Fibonacci
extension</a> level. </p><p>On the 1 hour chart below, we can
see that there’s a divergence going on between the price and the MACD. This is
a signal of a weakening buying momentum and we may see a pullback before
another leg up. </p><p>The support level for the
retracement should be the 131.82 level as we can see it held the price quite
well both on the upside and on the downside. Today’s <a target=“_blank“ href=“https://www.forexlive.com/news/why-wednesdays-us-retail-sales-report-could-be-stronger-than-expected-20230214/“>Retail
Sales</a> report may give us some movement as a beat to the expectations should
lead to further upside and a miss should give us the pullback to 131.82. </p>

This article was written by ForexLive at www.forexlive.com.