US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US CPI last
  week 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.
• The other important economic data like the ISM
  Services PMI, Jobless Claims and Retail Sales all beat expectations recently.
• The Fed members are leaning towards a pause in
  September and the next decision will still be dictated by the economic data.
• The market doesn’t expect the Fed to hike at the
  September meeting, but there’s now basically a 50/50 chance of a hike in
  November.

Japan:

• The BoJ kept everything unchanged as expected at the last meeting but
  tweaked the YCC policy keeping the target band unchanged but giving more
  flexibility with a hard cap at 1.00%.
• The Japanese CPI data surprised to the upside
  recently with the core-core reading reaching again the previous high.
• The Unemployment Rate surprisingly increased recently,
  although it remains near cycle lows.
• BoJ Governor Ueda last week said that his focus is on
  a quiet exit from the monetary easing and added that the BoJ should have enough
  data by year end to decide how to proceed.
• The Japanese wage data last week 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 the USDJPY pair looks to be trading within a rising channel with the upper
bound and the 150.00 handle being the target on the upside. The recent bounce
on the black trendline and the
red 21 moving average led to a
rally into the 147.85 resistance where
the price started to struggle. A break above the resistance should lead to a
rally into the 150.00 handle, while a break below the trendline might cause a
selloff into the 145.00 support.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
action around the resistance has created an ascending triangle.
Generally, when the price breaks out of such patterns, we can see a strong and
sustained move following on. So, a break to the upside should see more buyers
piling in and target the 150.00 resistance, while a break lower is likely to
see more sellers stepping in and target the 145.00 support.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is testing the trendline again which is where we can expect the buyers to
pile in as well with a defined risk below the trendline to target a break to
the upside.

Upcoming Events

This week has just a couple of important economic
releases with the FOMC and BoJ rate decisions being the highlight. Tomorrow,
the Fed is expected to keep rates unchanged, and the market will focus more on
the Dot Plot and Fed Chair Powell’s press conference, although he’s likely to
repeat that they remain data dependent. On Thursday, we will get the US Jobless
Claims data. On Friday, we will see the latest Japan CPI report and then move
on to the BoJ policy decision where the central bank is expected to keep everything
unchanged. Later in the day we conclude the week with the US PMIs data.

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