The USDJPY pair has experienced a rejection of a key trendline following recent decisions from the Bank of Japan (BoJ) and the Federal Open Market Committee (FOMC). The USD has remained stable since the FOMC meeting, where the Fed held rates steady and slightly adjusted growth and inflation forecasts.
Fed Chair Powell noted uncertainties regarding US policies and inflation but affirmed the economy’s health. Meanwhile, the BoJ maintained its position, tracking developments in global trade closely, particularly concerning tariff policies. Market expectations indicate a potential tightening of 32 basis points by year-end, contingent on inflation data trends.
Technical Analysis Of Usdjpy
Technical analysis shows that USDJPY pulled back to the trendline, where sellers emerged. A sustained price increase above this trendline would suggest potential movement towards 160.00, while a continued decline could target 140.00.
On shorter timeframes, the USDJPY has broken below minor upward trendlines, with sellers likely to dominate unless there is a resurgence above these lines. Today’s US Jobless Claims figures and Japan’s CPI report tomorrow are anticipated to provide further direction.
The Federal Reserve’s decision to leave interest rates unchanged has offered stability to the US dollar, demonstrating policymakers’ confidence in the economy despite existing uncertainties. Powell acknowledged possible risks but remained clear that the broader economic conditions support current policy measures. Markets have interpreted this stance as steady but adaptable, with rate adjustments remaining subject to inflationary pressures and incoming data.
The Bank of Japan, on the other hand, has adopted a cautious approach. Officials are carefully observing global trade shifts, particularly those linked to tariffs, which could influence Japan’s economic outlook. Current market pricing reflects an expected 32 basis-point rise by year-end, dependent on inflation trends. This implies that traders should focus on incoming price data, as it will likely shape monetary policy adjustments moving forward.
Short Term Market Outlook
From a technical perspective, the rejection of a key trendline has highlighted sellers’ willingness to defend higher levels. If price action decisively pushes above this trendline, there would be cause to anticipate a continuation towards 160.00. However, should downward pressure persist, levels near 140.00 could become the next target.
On lower timeframes, recent breaks beneath smaller ascending trendlines indicate potential weakness. Unless buyers re-enter the market with strong momentum, sellers are likely to dictate short-term direction. Attention should now turn to upcoming reports, with US jobless claims figures expected to provide insight into labour market conditions. Japan’s inflation data, due tomorrow, may well influence the Bank of Japan’s next steps. These releases hold the potential to shift sentiment, requiring active monitoring of price reactions.
