FOREX: USDJPY Sinks Post-Fed, Technical Outlook Remain Bearish
- The majority of the action in currency markets following the Fed has been for the Japanese Yen, as the bull steepening for the treasury curve provided a significant JPY boost, undeterred by the strong rally for US equities. The moves come as the Federal Reserve decided to slow the pace at which it is reducing Treasuries holdings in its balance sheet to a cap of USD5 billion per month from USD25 billion previously.
- USDJPY was sharply lower post the decision falling around 50 pips from 149.90 to 149.40 ahead of Chair Powell’s press conference. The pair then gathered momentum to the downside through the earlier post-BOJ lows at 149.14, falling as low as 148.67.
- Overall, moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend - this suggests short-term gains over the past week are corrective. Support is not seen until 147.75, the March 14 low.
- On the session as a whole, the greenback remains firmer against most G10 peers, emphasised by the 0.3% gains for the ICE dollar index.
- Weakness for EURUSD standout, having spent a large portion of the session back below the 1.0900 handle. Early slippage was on the back of wider risk concerns relating to the Turkish newsflow relating to the arrest of Istanbul mayor and key opposition figure Ekrem Imamoglu. Initial EURUSD support remains much lower – at 1.0761 and 1.0721, the 20-day EMA.
- Australia will release February employment data on Thursday keeping AUDUSD (-0.16%) in focus, particularly important given the RBA said that the strong labour market would have been the key reason to leave policy on hold in February.
- 0.6400 continues to provide solid pivot resistance for the pair, having not closed above this level since early December. Clearance of 0.6409, the Feb 21 high, would be required to strengthen a bull cycle and confirm a resumption of the uptrend that started Feb 3. On the downside, initial support to watch is 0.6259, the Mar 11 low.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: President Trump Emphasises Desire for Reciprocity on Trade
- In a long post on reciprocal tariffs (via x.com) President Trump has said the following:
- "On Trade, I have decided, for purposes of Fairness, that I will charge a RECIPROCAL Tariff meaning, whatever Countries charge the United States of America, we will charge them - No more, no less!"
- "I have instructed my Secretary of State, Secretary of Commerce, Secretary of the Treasury, and United States Trade Representative (USTR) to do all work necessary to deliver RECIPROCITY to our System of Trade!"
- Full link here: https://x.com/realDonaldTrump/status/1891572283161944433
USDJPY TECHS: Bear Threat Remains Present
- RES 4: 158.87 High Jan 10 and a bull trigger
- RES 3: 156.75 High Jan 23
- RES 2: 155.89 High Feb 3
- RES 1: 154.36/80 50-day EMA and a pivot resistance / High Feb 12
- PRICE: 151.40 @ 16:15 GMT Feb 17
- SUP 1: 150.93 Low Feb 07 and a bear trigger
- SUP 2: 149.69 Low Dec 9
- SUP 3: 148.65 Low Dec 3 ‘24 and a key support
- SUP 4: 148.01 Low Oct 9 ‘24
USDJPY has pulled back from last week’s high. The latest move down highlights that - for now - resistance around the 50-day EMA, remains intact. The average is at 154.36. A clear break of the 50-day average is required to highlight a stronger bullish reversal. This would open 155.89, the Feb 3 high. Key support and the bear trigger is unchanged at 150.93, the Feb 7 low. Clearance of this level would resume the bear cycle that started on Jan 10.
EURGBP TECHS: Pivot Resistance Remains Intact
- RES 4: 0.8474 High Jan 20 and a key resistance
- RES 3: 0.8420 76.4% retracement of the Jan 20 - Feb 3 bear leg
- RES 2: 0.8388 61.8% retracement of the Jan 20 - Feb 3 bear leg
- RES 1: 0.8378 High Jan 6
- PRICE: 0.8312 @ 16:12 GMT Feb 17
- SUP 1: 0.8297/8248 Low Feb 4 / 3 and a bear trigger
- SUP 2: 0.8223 Low Dec 19 and a key support
- SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range
- SUP 4: 0.8163 123.6% retracement of the Dec 19 - Jan 20 bull leg
EURGBP continues to trade in a range. The early February bounce still appears to have undermined a recent bearish threat. Attention is on 0.8378, the Jan 6 high and a key short-term pivot resistance. Clearance of it would strengthen a bullish condition and signal scope for a stronger recovery. For bears, a resumption of weakness would once again refocus attention on 0.8248, the Feb 3 low and bear trigger.
