USDJPY Technical Analysis – The greenback gets a relief from positive data

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.