fundamental overview
USD:
The US dollar weakened yesterday after Trump announced a five-day ceasefire for talks towards a “complete and comprehensive resolution of hostilities” on his Truth social account.
However, the selloff in the greenback was short-lived as Iran immediately denied the claims. Most notably, Iranian Parliament Speaker Ghalibaf, who is reportedly the key figure handling negotiations with the US, said that there had been no negotiations with Washington.
These conflicting reports have kept markets largely range-bound after the initial surge, with traders waiting for clear developments. For now, the US dollar is likely to remain supported until tensions officially ease.
JPY:
In the case of JPY, nothing has changed as lack of progress on the inflation front and geopolitical risks will continue to weigh on the currency. Today, we got the latest Japanese CPI report, and the data showed that inflation has declined further and the core figure is well below the BOJ’s 2% target.
Preliminary results from spring wage talks point to the third consecutive fiscal year in which average wage growth in Japan will exceed 5%. This should maintain the hawkish bias, but the central bank may want to wait for the US-Iran war to end to avoid growth fears.
USDJPY Technical Analysis – Daily Time Frame
USDJPY – Daily
On the daily chart, we can see that USDJPY retreated from the 160.00 handle and started consolidating above the 157.65 level which is now acting as support. We can expect buyers to continue to move around the support with a defined risk below it to target a rally at the 161.95 level. On the other hand, sellers would like to see the price drop below the key trendline around the 154.00 handle.
USDJPY Technical Analysis – 4 Hour Time Frame
USDJPY – 4 hours
On the 4-hour chart, we can more clearly see the consolidation between 157.65 support and 159.75 resistance. Until we get a breakout on either side, traders will continue to play the range by buying at support and selling at resistance.
USDJPY Technical Analysis – 1 Hour Time Frame
USDJPY – 1 hour
On the 1-hour chart, we can’t add much here as buyers will have a better risk of rewarding setups around support, while sellers will gain more conviction on breaking below support. The red lines define the average daily range for today.
upcoming catalyst
Today we have the US PMIs. On Thursday, we will get the latest US jobless claims data. The focus is still on the US-Iran war and now negotiations, so keep an eye on the headlines.
