US data continues to surprise to the upside and as a result the market has been reassessing interest rate expectations on the hawkish side as Fed members keep repeating that two or more rate hikes cannot be ruled out if the data remains solid. On the other hand, the BoJ remains committed to loose monetary policy, which causes the JPY to weaken further. There are small hints that the BoJ may adjust the YCC policy at the next meeting, but the central bank has disappointed the markets for a long time.

USDJPY Technical Analysis – Daily Time Frame

USDJPY daily

On the daily chart, we can see that USDJPY is still charging higher with almost no declines. This strong rally is being led by a hawkish repricing in interest rate expectations as US data continues to surprise to the upside. A break of the resistance at 142.17 has opened the door for a rally towards the 150.00 level as there is no clear strong resistance until then.

USDJPY Technical Analysis – 4 Hour Time Frame

USDJPY 4 hours

On the 4-hour chart, we can see that the current rally is supported moving averages as buyers still rely on them to get further growth. In fact, the price is now pulling back to the red moving average of 21 and trend line, we can expect buyers to step in again. Sellers, on the other hand, will need to see the price break below the trendline to start looking for a bigger pullback at 142.17 resistance has now turned to support.

USDJPY Technical Analysis – 1 Hour Time Frame

USDJPY 1 hour

On the 1-hour chart we can see how cleanly the price printed higher highs and higher lows and that the entire movement after the breakout is diverging with MACD. This is generally a sign of fading momentum, often followed by pullbacks or reversals. So, if the price stays above the trendline, we can expect more upside, but a break below would signal a pullback towards the 142.17 support. Todaywe have the US PCE report and the hit is likely to boost the USD leading to further USDJPY gains but a miss should ensure a pullback to support at 142.17.

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