USD/JPY rebounds into a key resistance as interventions can’t stop yen’s slide
FUNDAMENTAL OVERVIEW
USD:
The US dollar regained some ground at the start of the week as both Trump and Iran rejected the respective war-ending proposals calling them unacceptable and leaving the two sides miles apart on any potential agreement. Moreover, there are some reports pointing to a possible restart of the war, which keeps the geopolitical risk high.
This kind of headline noise has been going on for several weeks and kept the price action in rangebound mode as traders continued to wait for new developments before picking a direction.
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.
There’s also another scenario where the Strait remains closed for longer and oil prices stay elevated, with the risk that the Fed turns hawkish anyway and gives the greenback a strong boost given the bearish positioning on the dollar.
JPY:
On the JPY side, nothing has changed fundamentally. Japanese officials have been intervening in the FX market, but yen sellers have been quick in fading the moves due to the persistently negative macro backdrop.
The BoJ recently left interest rates unchanged at 0.75% as widely expected but the highlight of the decision weren’t the three dissenters voting for a rate hike, but Governor Ueda adopting a less hawkish stance.
In fact, 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 of 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 the interventions. 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 is now trading around the key 158.00 resistance zone. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the major trendline. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into the 162.00 handle next.
USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, there’s not much we can add as the main levels remain the resistance zone around the 158.00 level and the major upward trendline. We might just range here until we get a breakout on either side.
USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor support zone around the 156.50 level. If the price falls into it, we can expect the buyers to step in with a defined risk below the support to keep pushing into new highs. The sellers, on the other hand, will look for a break to increase the bearish bets into the major trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US CPI report. Tomorrow, we have the US PPI data. On Thursday, we get the US Retail Sales report and the latest US Jobless Claims figures.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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