USD/JPY Daily Chart Analysis – 2024-04-05

USD/JPY is exhibiting signs of a consolidated trading pattern, remaining confined below the 152.00 threshold for an extended period, now reaching twelve days. The pair has been sensitive to the potential risk of intervention by Japanese authorities, which has acted as a psychological barrier, deterring the market from pushing the pair significantly higher.

The price structure is hovering near the 10-Day Moving Average (DMA) and the Tenkan line, both situated around 151.40, which have been providing reliable support. Despite the current sideways movement, there remains a speculative bullish sentiment in the market, with some traders positioning for a breakout towards 155.00.

Fundamental Analysis: Fundamentally, the market’s focus is on the upcoming U.S. jobs report. Recent concerns raised by U.S. claims and layoffs data have put the labor market’s robustness in question. However, a stronger-than-expected jobs report could potentially tip the scales, prompting market speculation about the feasibility of the Federal Reserve’s rate cuts and increasing the probability of Japanese intervention.

A former Japanese FX diplomat’s opinion that intervention is unlikely before the pair reaches 155 adds another layer to the market’s expectations. The U.S. CPI report due next Wednesday will be critical in shaping the Fed’s rate decision calculus.

Overall Market Sentiment: The sentiment is cautiously optimistic, with the market caught between intervention risks and the potential for bullish breakout.

Sentiment Percentage Breakdown:

• 50% Positive: Underpinned by the consistent support levels and the speculative anticipation of a breakout above current resistance.
• 30% Neutral: Reflecting the wait-and-see attitude ahead of significant economic data releases from the U.S.
• 20% Negative: Taking into account the possibility of Japanese intervention and recent mixed labor market data from the U.S.

Resistance levels are clearly delineated at 152.55 and twin Fibonacci levels at 153.20, with any close below 151.50 post-U.S. jobs data likely to be perceived as a sign of weakness in the uptrend. The optimistic sentiment is banking on strong U.S. economic performance to spur a rally, while the negative sentiment remains wary of intervention risks and potential for weaker-than-anticipated jobs data to undermine the bullish case.