Fundamental
Overview
Yesterday, the Fed finally started
its easing cycle and decided to do it with a 50 bps cut. The market was already
leaning towards a 50 bps move, so it wasn’t a surprise.
The larger cut was framed
as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by
the end of the year and less than the market expected in 2025.
The US Dollar weakened
initially but eventually shot higher as Treasury yields rallied on a less
dovish than expected Powell with the market pricing out the aggressive rate
cuts expected in 2025.
Now that the decision is
behind us, the focus will be on the economic data. If we start to see an improvement,
then Treasury yields will likely continue to rise and drive USDJPY higher.
Conversely, if the data weakens significantly, the market will start to worry
about a recession and take USDJPY lower.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY bounced strongly from the 140.00 handle following the Fed decision.
We got a rejection around the 143.50 level as the sellers stepped in around the
previous swing low level.
The buyers will want to see
the price breaking higher to increase the bullish bets into the 150.00 handle.
The sellers, on the other hand, will want to see the price breaking through the
140.00 support
to increase the bearish bets into new lows.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see more clearly the rejection from the 143.50 level. If we get a deeper
pullback, the buyers will likely lean on the upward trendline
around the 141.00 handle to position for a break above the major trendline
around the 145.00 handle.
The sellers, on the other
hand, will want to see the price breaking below the trendline and the 140.00 support
to increase the bearish momentum.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that we have a minor support zone around the 142.00 handle. This is where
we can expect the buyers to step in with a defined risk below the support to
position for a rally into the major trendline.
The sellers, on the other
hand, will want to see the price breaking to the downside to increase the
bearish bets into the 141.00 handle. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the Japanese CPI and the BoJ Rate Decision.