USDJPY Technical Analysis – The market is waiting for fresh catalysts

Fundamental Overview

The Fed yesterday delivered on expectations by holding rates steady and keeping the dot plot on two rate cuts for 2025. Fed Chair Powell didn’t offer anything in terms of forward guidance as the uncertainty continues to favour a wait-and-see approach. The USD strengthened a bit following the announcement, but it had more to do with noise rather than signal. The Fed decision was overall a non-event.

The market continues to price in two rate cuts in 2025, but the path of least resistance favours more rate cuts. Therefore, the greenback will need stronger data to trigger a more hawkish repricing and get a boost.

On the JPY side, the BoJ kept interest rates unchanged at 0.5% and reduced the bond tapering plan for fiscal year 2026 as expected. That was also a non-event which was also reflected in the market with light changes in the exchange rate. We are in a very low volatility period as we continue to wait for fresh macro developments and key catalysts that could change the current expectations.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY continues to range between the 142.35 and 146.00 level. The price is now approaching the 146.00 handle where we should either get another rejection into the support or a breakout. We need to zoom in to see some more details.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price yesterday bounced on the 144.30 zone which has been acting as kind of a barometer for the near-term momentum. The buyers stepped in to position for a rally into the 146.28 level next. The sellers might want to wait for the price to come into the resistance to position for a drop back into the support with a better risk to reward setup.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price is now trading right in the middle of the two key levels. There’s not much to do here other than waiting for the price to come into either of those levels to get better risk to reward setups. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow, we conclude the week with the Japanese CPI.