US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations, so the market’s pricing remained roughly the same.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also
  yesterday with the strong beat in Jobless Claims.
• The market doesn’t expect the Fed to hike again at
  the moment.

Japan:

• The BoJ kept everything unchanged as expected.
• The Japanese CPI today showed that inflationary
  pressures remain high with the core-core reading hovering at the cycle highs.
• The Unemployment Rate surprisingly increased recently,
  although it remains near cycle lows.
• The Japanese Manufacturing PMI fell further into contraction but
  the Services PMI remains in expansion.
• BoJ governor Ueda repeated that they will not
  hesitate to take additional easing measures if needed and clarified that the
  recent comment on “quiet exit” from monetary easing was misinterpreted.
• The recent Japanese wage data showed a slowing in wage growth,
  and this is something the BoJ focuses on particularly.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY remains in an uptrend, but the bullish momentum is clearly waning.
The red 21 moving average
continues to act as dynamic support and the fundamentals keep supporting more
upside for the pair, but it looks like one ugly economic release for the US
could make the pair fall hard to the 145.00 level. For now, the 150.00 level
remains the target for the buyers.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
massive divergence with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we only got pullbacks, but the price action has been
forming what looks like a rising wedge, which
is a reversal pattern. So, this will be something to watch out for.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price action is very messy and it’s hard to find clear levels to lean on.
Nonetheless, we have two key levels to watch now. A break above the recent high
at 148.47 should see more buyers coming into the market and keep the uptrend
going, while a break below the low at 147.32 should confirm the break of the
rising wedge and lead the pair to the 145.00 support.

Upcoming Events

Today we only have the
Flash PMIs for the US before we head into the weekend. Strong data is likely to
keep the pair supported but weak readings might cause a selloff.

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