FundamentalOverview

The USD has been supportedacross the board in the first half of the month as the positive news on thetrade front triggered a more hawkish repricing in interest rates expectations. Oncethe market got back in line with the Fed’s baseline of two rate cuts in 2025,the greenback lost that support and began to weaken again.

For further gains, the USDollar will need either strong economic data to make the market to price out therest of the rate cuts expected by year-end or weak data from its peers to makethe divergence with the Fed stronger.

On the JPY side, thecurrency has been supported recently by the surge in long term Japanese yieldsas repatriation flows likely boosted the famous safe haven. Market participantswere calling for some kind of intervention before things could get uglier.

Sure enough, yesterday wegot the newsthat Japan was considering trimming the issuance of super-long bonds. That wasenough to calm the markets, and we saw yields and the Japanese Yen fallingpretty quickly.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY bounced around the most recent swing low at 142.35 and extendedthe move to the upside following the Japanese bond market news. There’s notmuch we can glean from this timeframe, so we need to zoom in to see some moredetails.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the price broke above the downward trendline that was defining thebearish momentum and the resistance zone around the 143.00 handle. If the pricecomes back to retest the resistance now turned support, we can expect thebuyers to step in with a defined risk below the support to position for a rallyinto the 148.32 level. The sellers, on the other hand, will want to see theprice breaking lower to start targeting the 140.00 handle again.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a minor support zone around the 143.85 level. From a risk managementperspective, the buyers will have a better risk to reward setup around the minorsupport to position for further upside, while the sellers will look for a breaklower to pile in for a deeper pullback into the 143.00 handle. The red linesdefine the average daily range for today.

UpcomingCatalysts

Today, we have the FOMC Meeting Minutes. Tomorrow, we getthe latest US Jobless Claims figures. On Friday, we conclude the week with theTokyo CPI, the US PCE price index and the final UMich Consumer Sentimentreport.

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