Fundamental
Overview
The USD sold off hard almost
across the board following Trump’s worse than expected tariffs announcement on
Wednesday. The market reacted to the news by pricing in aggressively more rate
cuts for the Fed in expectations of a bigger hit to the US economy compared to
the rest of the world.
At the moment, the market
is seeing 100 bps of easing by year end and 35% chance of a rate cut at the
upcoming meeting. Today we have the NFP report and especially Fed Chair Powell
speaking. These two events will shape the expectations further, especially
Powell’s speech.
On the JPY side, the
currency has been driven mainly by global events rather than domestic
fundamentals as the market even scaled back rate hikes expectations with just 7
bps of tightening seen by year end compared to 31 bps before Trump’s
announcement.
The Japanese Yen got a
boost from the risk-off flows triggered by Trump’s announcement which saw the
US Treasury yields falling as the market started to price in more and more rate
cuts from the Fed amid recessionary fears.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY couldn’t break above the key 151.00 resistance
and eventually sold off hard following the surprising worse than expected Trump’s
tariffs announcement.
We are now trading below
the March low, and the sellers will likely continue to pile in around these
levels to keep pushing into the next support around the 140.00 handle. The
buyers, on the other hand, will want to see the price rising back above the 146.60
level to start targeting a pullback into the 148.60 level next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see more clearly the recent price action with the big selloff following Trump’s
announcement. We can see that the pair is now consolidating between yesterday’s
low and the March low at 146.60. The buyers will look for a break higher to
position for a pullback into the 148.60 level next, while the sellers will look
for a break lower to increase the bearish bets into the 140.00 handle.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, there’s
not much else we can add here as we will likely continue to consolidate until
the NFP report and Fed Chair Powell speech. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US NFP
report and Fed Chair Powell speech.
