USD/JPY finally reaches a key level after multiple interventions. What’s next?
FUNDAMENTAL OVERVIEW
USD:
The US dollar weakened across the board again today following several positive news on the US-Iran front. Late yesterday, the US Secretary of State Marco Rubio declared Operation Epic Fury concluded and its objectives achieved. That was followed by Trump tonight pausing Project Freedom so that the US could work to finalise a deal with Iran. The pause was of course interpreted as another step towards a deal.
Lastly, just a few minutes earlier, we got an Axios report saying that US and Iran are getting close to a one-page memo to end the war and that US officials are said to be expecting Iran's response to several key points in the next 48 hours.
Looking ahead, the Fed is slowly abandoning the easing bias amid resilient US data and elevated energy prices. The reopening of the Strait could weigh on the greenback in the short-term as oil prices will likely crater and rate cut bets will increase.
After that though, the focus will quickly turn back to the Fed and the economic data. With the end of the war, the increase in economic activity could keep inflation higher for longer and eventually even require rate hikes to bring it sustainably back to the 2% target that the Fed has been missing since 2021.
JPY:
On the JPY side, nothing has changed fundamentally. Japanese officials have been intervening in the FX market since last week but after the first big selloff on Thursday, dip-buyers have been quick in fading the moves and selling the yen. Unfortunately, interventions are useless given the negative macro backdrop.
In fact, the BoJ left interest rates unchanged at 0.75% as widely expected last week. The quarterly outlook report showed a significant upward revision for inflation and a downgrade for growth due to the US-Iran war. The highlight of the decision though were the three dissenters who voted for a rate hike, which gave the Japanese yen a short-term boost.
Most of the gains were pared back as Governor Ueda struck a more measured tone in the press conference as he noted that they want to take a little bit more time in gauging how the Middle East situation would affect Japan’s economy and acknowledged that underlying inflation is currently a bit below the 2% target.
He added that they expect underlying inflation to be around 2% from second half 2026 but admitted that he doesn’t know how many months it would take to gauge timing of their next rate hike. This is going to keep weighing on the Japanese yen despite intervention talk. All in all, the bias for the Japanese Yen remains bearish.
USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDJPY dropped below the key support zone around the 158.00 handle following Japan’s intervention and pulled back to retest the support now turned resistance. We got another intervention today that pushed the pair into the key 155.00 handle near the major upward trendline.
That’s where the dip-buyers stepped in with a defined risk below the trendline to position for a rally into the 162.00 level next. The sellers will need the price to break below the trendline to open the door for new lows.
USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see more clearly the two major interventions that pushed the pair all the way down to the 155.00 level. There were other minor interventions in between that kept the pair in a tight range for a couple of days. The key levels remain the major trendline and the resistance zone around the 158.00 handle.
If the price pulls back into the resistance again, we can expect the sellers to step in with a defined risk above it to position for a drop into the trendline targeting a breakout. The buyers, on the other hand, will want to see the price breaking above the resistance to increase the bullish bets into the 162.00 level next.
USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor resistance around the 156.50 level. If the price gets there, we can expect the sellers to step in with a defined risk above the level to keep pushing into new lows, while the buyers will look for a break to extend the pullback into the key resistance zone targeting a breakout. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have the US ADP report. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the Japanese wage data, the US NFP report and University of Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
FX初心者には必須 無料のうちにGET！
