Image Source: Unsplash
 

USD/JPY steadies post-Fed, intervention risks remain

USD/JPY’s recovery from 152 his stalled below 154 as the rebound in the US dollar runs out of steam. The US dollar index remains close to multi-year lows.

The U.S. dollar remains on shaky ground amid uncertainty over U.S. economic and foreign policies, despite a slightly more hawkish tone from the Federal Reserve.

As expected, the Federal Reserve left interest rates unchanged at 3.5%-3.75% and noted an improving economic outlook, indicating that the Fed is comfortable keeping rates on hold for longer.

The US dollar fell sharply at the start of this year, dropping to a four-year low after President Trump dismissed concerns about the currency's weakness. However, Treasury Secretary Scott Besson said yesterday that Washington has a strong-dollar policy, which is helping the U.S. dollar recover from its four-year low.

That said, the recovery has run out of steam, with the currency on the back foot against major peers once again. The US dollar has traded 2% lower year to date, driven by concerns over Trump's erratic policymaking, worries about Fed independence, and, more recently, signs that the US was willing to sell dollars to support the yen.

The yen is trading between 152 and 154 this week following a rate check by the US and Japan on Friday, often seen as a precursor to intervention. The prospect of intervention keeps yen bears at bay. Japanese bond yields are also recovering lower from multi-decade highs last week on tax cut plans from PM Takaichi.

Attention will now turn to US jobless claims later today, ahead of Tokyo CPI inflation figures overnight.
 

USD/JPY forecast – technical analysis

USD/JPY broke below the near-term rising trendline support, aggressively falling to 152.00, the rising trendline dating back to April. The price has recovered higher from this support, bringing the RSI out of oversold territory.

Sellers would need to take out the 152 support to spur a deeper selloff towards the 200 SMA at 150.00.

Should buyers extend the recovery, resistance is seen around 154.50. Above here, 157.75 comes into focus.
 

(Click on image to enlarge)

FTSE rises as oil majors and miners rally

The FTSE is rising, outperforming its European peers, boosted by miners and oil majors, as rising commodity prices and higher earnings lift spirits.

With gold trading at fresh record highs of nearly 5,600, precious metal miners are outperforming. Endeavour trades over 5% higher, whilst Fresnillo is up 2.8%.

Gold has risen to record levels, driven by a weaker U.S. dollar, escalating geopolitical tensions, and erratic U.S. policy, which have spurred safe-haven flows.

Meanwhile, oil prices also jumped to 4-month highs as President Trump warned that time is running out for Iran to make a nuclear deal. Concerns that regional conflict could disrupt supply from OPEC's fourth-largest member have lifted the risk premium on oil. Oil majors tracking oil prices higher.

Corporate earnings have also come through thick and fast. Antofagasta is up over 6% after the mining giant reported a modest 1.6% decline in its copper production but maintained its 2026 outlook as copper futures reached $13,934 per metric tonne.

Meanwhile, EasyJet, the budget airline, was also flying 2.6% higher after reiterating full-year guidance.

Gains in the FTSE could be limited by the strength of the pound, which trades at multi-year highs above 1.38 on U.S. dollar weakness. A strong pound results in a less favourable exchange rate for multinationals, which account for 80% of the FTSE.
 

FTSE 100 forecast – technical analysis

On the 4-hour chart, the FTSE trades above its rising trendline dating back to late December last year, encountering resistance at the record high of 10,250 before falling. The price has recorded higher lows, but it has failed to make a higher high, running into resistance at the falling trendline. Momentum has recovered, which could help buyers push above the 10,225 resistance to break out towards the 10,250 record high. Above here, 10,300 is relevant ahead of 10,500.

Support is seen at 10,150, the rising trendline support and yesterday’s low. A break below here opens the door to a deeper selloff towards 10,000.
 

(Click on image to enlarge)

More By This Author:

Two Trades To Watch: Gold, FTSE 100 Forecast - Wednesday, Jan. 28
Two Trades To Watch: USD/JPY, DAX Forecast - Tuesday, Jan. 27
Weekly Equities Outlook: Tesla, Microsoft, Apple