surprise to the upside and as a consequence led the market to reprice interest
rates expectations on the more hawkish side as the Fed members keep on
repeating that two or more rate hikes cannot be ruled out if the data remains solid.
On the other hand, the BoJ remains stuck with its loose monetary policy causing
further weakness in the JPY. There are small hints that the BoJ may tweak the
YCC policy at the next meeting, but the central bank has been disappointing
markets for quite a long time now.
USDJPY Technical Analysis –
Daily Timeframe
On the daily chart, we can see
that USDJPY keeps on charging higher with almost no pullbacks. This strong
rally is led by the hawkish repricing in interest rates expectations as the US
data keeps on surprising to the upside. The breakout of the resistance at
142.17 has opened the door for a rally towards the 150.00 level as there’s no
clear strong resistance until then.
USDJPY Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the current
rally is supported by the moving averages as the
buyers keep on leaning on them to position for further upside. In fact, now
that the price is pulling back into the red 21 moving average and the trendline, we can
expect the buyers to step in again. The sellers, on the other hand, will need
to see the price to break below the trendline to start looking for a bigger
pullback into the 142.17 resistance now turned support.
USDJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see how
cleanly the price has been printing higher highs and higher lows and that the
whole move after the breakout is diverging with
the MACD. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. So, as long as the price stays above the trendline we can expect
more upside, but a break lower would signal the pullback towards the 142.17
support. Today, we have the US
PCE report and a beat is likely to strengthen the USD leading to more upside in
USDJPY, but a miss should provide the pullback into the 142.17 support.
This article was written by FL Contributors at www.forexlive.com.