Fundamental
Overview
The US dollar yesterday got
bid across the board in the European session with no strong fundamental background
which suggested that it could have been just some position squaring given the
overstretched shorts on the dollar.
Sure enough, the gains were
eventually completely erased and the greenback got sold off pretty hard on two
key catalysts. The market started to expect the end of the conflict which was
then validated by Trump’s post on his social media platform.
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. That was a non-event given that everything was already priced in. The
BoJ continues to place a great deal on the US-Japan trade deal and the
evolution of inflation.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY rallied into the key 148.28 level yesterday morning amid some squeeze
in US dollar shorts. The price then reversed pretty quickly
following dovish Fed’s Bowman comments and the bearish momentum increased as
the price broke below the 146.28 level and the end of Israel-Iran conflict came
into sight.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that there’s not much we can do here as the price is trading basically in
the middle of two key levels. From a risk management perspective, the buyers
will have a better risk to reward setup around the 144.30 support zone, while
the sellers will look for a break lower to extend the correction into the
142.35 level next. On Thursday, we get the latest US Jobless Claims
figures and the Final US Q1 GDP report
