FundamentalOverview

The USD continues to remainunder pressure against most major currencies despite higher Core PCE estimatesfollowing the US CPI and PPI reports, and a better-than-expected RetailSales data yesterday.

The market pricing for theFed went from expecting more than 80 bps of easing by year-end at the peak ofthe risk-off sentiment to roughly 60 bps as of now. That didn’t provide apullback in the US Dollar selloff though. The focus now switched to the FOMCdecision due tomorrow where the Fed is expected to keep rates steady.

On the JPY side, the datarecently started to come out on the softer side and Governor Ueda recentlydidn’t sound like someone who’s in a hurry to raise rates amid someuncertainty. The Japanese Yen in the past couple of weeks has been supportedacross the board more by the risk-off sentiment and falling Treasury yieldsrather than domestic fundamentals.

As the risk sentimentimproved and Treasury yields bounced, the JPY started to lose ground againstmost currencies. Tomorrow, we have the BoJ policy decision where the centralbank is expected to keep everything unchanged.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY failed to sustain the break below the key 148.60 level andeventually pulled all the way back to the trendline. This is where we can expect thesellers to step in with a defined risk above the trendline to position for adrop into the 140.00 handle. The buyers, on the other hand, will want to seethe price breaking higher to increase the bullish bets into the 160.00 handlenext.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we now have an upward minor trendline defining the bullish momentum onthis timeframe. If we were to get a pullback into the trendline, we can expectthe buyers to lean on it to position for the break above the major trendline,while the sellers will look for a break lower to increase the bearish bets intothe 140.00 handle next.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the sellers will look for a rejection aroundthe trendline, while the buyers will target a break above it. The red linesdefine the average daily range for today.

UpcomingCatalysts

Tomorrow we have the rate decisions from the BoJand the Fed. On Thursday, we get the US Jobless Claims figures. On Friday, weconclude the week with the Japanese CPI.

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