Fundamental Overview
The USD has been on a rough ride since last Monday when the dovish Fed’s Bowman comments and the end of Israel-Iran conflict saw the market increasing the probabilities for a third rate cut in 2025. Yesterday we reached a peak of 69 bps of easing by year-end before pulling back to 64 bps after the better than expected US ISM Manufacturing PMI and US Job Openings data.
On the JPY side, nothing has changed fundamentally, and the currency has been mainly driven by the risk sentiment. As a reminder, the BoJ kept interest rates unchanged at 0.5% and reduced the bond tapering plan for fiscal year 2026 as expected at the last meeting. The BoJ continues to place a great deal on the US-Japan trade deal and the evolution of inflation before looking at adjusting rates.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY bounced near the key 142.35 support. That’s where we can expect the buyers to keep stepping in with a defined risk below the level to position for a rally into the 148.28 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 140.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is testing the downward trendline that is defining the bearish momentum. We can expect the sellers to lean on the trendline with a defined risk above it to keep pushing into the 142.35 level and beyond, while the buyers will look for a break higher to increase the bullish bets into the 146.28 level next.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the sellers will look for a drop from these levels into the 142.35 level, while the buyers will look for a break above the trendline. We have a minor support at the 143.30 swing low level though.
That’s where we can expect the buyers to step in to for a break above the trendline with a better risk to reward setup, 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
Today, we get the US ADP data. Tomorrow, we conclude with the US NFP, the US Jobless Claims and the US ISM Services PMI before the US holiday on Friday.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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