The USDJPY pair has recently surpassed a vital trendline, indicating potential movements ahead. The USD saw support on Monday from favourable US PMIs, although overall gains were limited due to weak consumer confidence and rising inflation expectations.
Currently, the market anticipates two to three rate cuts this year, remaining cautious as “Liberation Day” approaches. The JPY has shown little change in its domestic fundamentals, with expectations of around 36 bps tightening by the year-end.
Technical Outlook On The Daily Chart
Technically, the daily chart reveals a break above the trendline, suggesting buyers may target the 160.00 level. Conversely, sellers will seek a drop below this trendline to challenge higher prices.
In the 4-hour timeframe, the upward trendline signifies bullish momentum, with buyers having a preferable risk-to-reward setup near it. Sellers, however, are eyeing a break below this trendline for an opportunity to target the 140.00 level.
On the 1-hour chart, the trendline around 149.50 stands out, but there are limited levels for buyers or sellers. Upcoming releases include US Jobless Claims tomorrow and the Tokyo CPI and US PCE report on Friday.
Impact Of Upcoming Data Releases
The recent break above a longstanding trendline hints at the potential for continued volatility in the coming days. On Monday, the dollar found a degree of support following stronger-than-expected US PMI data. However, the upside was tempered by weaker consumer confidence figures alongside growing concerns about rising inflation expectations, limiting its ability to gain much traction.
With the broader market still pricing in the likelihood of two to three rate cuts before year-end, traders remain watchful as “Liberation Day” draws closer. Meanwhile, expectations for Japan’s monetary policy have hardly shifted, with markets still factoring in around 36 basis points of tightening over the same period. This discrepancy in outlooks may continue to drive fluctuations in the exchange rate as further economic data emerges.
The daily timeframe suggests that buyers could set their sights on the 160.00 level following the recent break higher. That said, those looking for a reversal will focus on whether price action drops back below the trendline, which could reinvigorate downward momentum. If that occurs, selling pressure may accelerate as traders attempt to push price action into deeper support zones.
On the four-hour timeframe, the existing upward trendline continues to reflect buying strength, meaning those positioned long will likely remain attentive to how price behaves around it. Entries near this area provide a clear risk-to-reward structure, but if bearish participants manage to pierce through and sustain lower levels, attention will shift towards a potential drop towards 140.00.
Meanwhile, the one-hour timeframe presents fewer immediate areas of interest, with the region around 149.50 acting as a structural reference point in the short term. Beyond that, movement is driven more by broader flows rather than clearly defined technical levels.
With US jobless claims scheduled for release tomorrow, followed by Tokyo CPI and the US PCE report on Friday, incoming data will be key in setting the tone for the next move. These figures stand to shape expectations around monetary policy adjustments, making them focal points for traders searching for fresh directional signals.
