- The USD/JPY price analysis shows a relief rally in the dollar.
- Trump told reporters he had no intention of removing Powell from office.
- Market participants are expecting business activity data from the US.
The USD/JPY price analysis shows a relief rally in the dollar after Trump paused his attacks on the Fed. Meanwhile, market participants are awaiting US business activity data for further clues on future Fed policy moves.
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The USD/JPY pair rose on Tuesday after Trump told reporters he had no intention of removing Powell from office. Initially, the dollar had collapsed amid threats to fire the Fed Chair. Trump was calling for the US central bank to lower borrowing costs and support the slowing economy. However, Powell has maintained a cautious tone, waiting for more evidence on inflation and growth.
Trump’s policy announcements in recent weeks have caused wild swings in the market. Initially, they cause a plunge before he softens his stance, causing a relief rally. However, all this has caused more uncertainty about the stability of US assets. Therefore, although the dollar recovered, the outlook remains bleak.
Meanwhile, market participants are expecting business activity data from the US. Upbeat figures might support the dollar. On the other hand, downbeat figures would increase recession concerns, putting pressure on the Fed to cut rates.
In Japan, the BoJ will likely pause at its May 1 meeting. However, analysts believe policymakers will maintain a hawkish tone due to a strong labor market and steady inflation.
USD/JPY key events today
- US flash manufacturing PMI
- US flash services PMI
USD/JPY technical price analysis: Price pauses to retest its channel resistance
On the technical side, the USD/JPY price has risen to retest the 142.02 key level and its bearish channel resistance. At the same time, the price is retesting the 30-SMA and has gone slightly above it. This is a sign that bulls are challenging the downtrend. The RSI has also broken above 50, suggesting stronger bullish momentum.
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However, the price recently made a lower low, continuing its downtrend. Moreover, it has maintained its decline in a bearish channel with clear support and resistance levels. Therefore, if the price remains within this channel, it will soon bounce lower to retest the 140.01 support level.
On the other hand, if bulls gain enough strength, they might trigger a break above the channel resistance. Such an outcome would signal a bullish sentiment shift.
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