USD/JPY Fundamental Analysis
On Friday, the exchange rate of Japan surged after CPI figures surpassed the forecasts in Tokyo for January. This raised expectations that a strong rise in the January CPI of Tokyo will lead to the process of unwinding the extra loose monetary policy. This pushed Yen against all of its G10 counterparts after facing heavy selling pressure throughout the past week.
There was no macroeconomic data released from USA or Japan today. Therefore, the forex pair was left at the mercy of risk sentiment and the USD performance. Furthermore, it seems that the strong inflation data, along with the persistent speculation about the Bank of Japan’s monetary policy, were offsetting the negative effects of QE easing. The bank of Japan implemented these additional QE to maintain the yield curve control program.
In the February FOMC meeting, the Federal Reserve is expected to announce another 25bps rate hike. Many Fed officials have backed these expectations recently. Meanwhile, there are a lot of economic data scheduled for release.
Japan’s economic docket will release its unemployment rate, which is expected at 2.5%. Prelim Industrial Production, Retail Sales, Consumer Confidence and Housing Starts are also scheduled on Tuesday. On the other hand, the US economic data will offer Employment Cost Index for Q4, Housing Price Index, and Chicago PMI. In addition to this, the high impact of CB Consumer Confidence is also scheduled to release on Tuesday. USD/JPY traders will keep a close look at all these economic figures tomorrow for further indications about price momentum.
USD/JPY Technical Analysis
The technical outlook of the H4 Chart of the USD/JPY forex pair shows that it is about to break the symmetrical triangle pattern. The pair is trading near the descending slope of the triangle and facing rejection at this level as of now. Also, the currency pair has been consolidating between the Moving average areas for the previous eight days. Meanwhile, the range of 100-Day SMA (orange line), 50-Day SMA (pink line), and the 20-Day SMA (yellow line) is contracting slowly, suggesting cautious investor sentiment.
Furthermore, the last H4 candle has already touched the descending slope of the symmetrical triangle. It means the next few hours will provide more robust signals for future price momentum. Therefore, any candle closing above the descending slope could provide more room for a bullish trend. However, if the slope is giving a continuous hard time to USD/JPY, the pair might extend its bearish trend.
Meanwhile, the RSI reading above the 50 levels also gives suggestions that gains might continue for a while. At the same time, the MACD indicator gives giving completely indecisive market reaction with a flat histogram and red signal line.
Daily Technical Levels
Pivot Point: 129.80