USDJPY Technical Analysis – The positive sentiment keeps weighing on the JPY

Fundamental Overview

The USD continues to be supported amid the ongoing de-escalation in trade wars. This has most likely to do more with positioning rather than fundamentals. The short dollar trade got very overstretched so positive news on the tariffs front is providing a pullback. In the medium term, the US Dollar should keep on depreciating as the path of least resistance for the Fed remains to cut rates.

On the JPY side, the currency has been driven mainly by global events rather than domestic fundamentals. Alongside the Swiss Franc, it’s been the favoured safe haven in the currencies space and as the sentiment improves, the Yen weakens. On the monetary policy front, the negative impact on the Japanese economy from tariffs uncertainty and the downward pressure on inflation from the surging yen will keep the BoJ on the sidelines for the time being.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY bounced from the key 140.00 handle and pulled all the way back to the 144.00 level. From a risk management perspective, the sellers will have a better risk to reward setup around the major trendline to position for further downside, while the buyers will look for a break higher to increase the bullish bets into the 151.00 handle next.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price broke above the downward trendline which is a good signal for the buyers, but it’s now testing the key 144.00 resistance. The sellers will likely pile in around these levels with a defined risk above the resistance to position for a drop back into the 140.00 handle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we have the US Job Openings data and the US Consumer Confidence report. On Wednesday, we have the US ADP, the US Q1 GDP and the US Employment Cost Index. On Thursday, we have the BoJ Policy Decision, the US Jobless Claims and the US ISM Manufacturing PMI. On Friday, we conclude the week with the US NFP report. As a reminder, the market is focused on tariff related news at the moment, so the data is not as market-moving as it used to be in the past months.

Watch the video below