Markets are entering the week on a bullish footing following a surprise US-China tariff truce that has reignited risk appetite and driven a broad rally in the US dollar. With sentiment shifting, investors now turn their attention to a packed economic calendar that includes high-impact data releases such as US CPI, PPI, retail sales, and UK GDP. These indicators will be closely watched for clues on inflation trends and potential shifts in monetary policy expectations. Meanwhile, technical setups—particularly in USDJPY—suggest further upside potential, though momentum remains subject to confirmation from key moving averages and macroeconomic developments.
Overview
Markets are entering the week on a bullish footing following a surprise US-China tariff truce that has reignited risk appetite and driven a broad rally in the US dollar. With sentiment shifting, investors now turn their attention to a packed economic calendar that includes high-impact data releases such as US CPI, PPI, retail sales, and UK GDP. These indicators will be closely watched for clues on inflation trends and potential shifts in monetary policy expectations. Meanwhile, technical setups—particularly in USDJPY—suggest further upside potential, though momentum remains subject to confirmation from key moving averages and macroeconomic developments.
Key Economic Events
Tuesday 09:00 am (GMT+3) – UK: Claimant Count Change (GBP)
Tuesday 15:30 (GMT+3) – USA: CPI m/m (USD)
Thursday 04:30 am (GMT+3) – Australia: Employment Change (AUD)
Thursday 09:00 am (GMT+3) – UK: GDP m/m (GBP)
Thursday 15:30 (GMT+3) – USA: PPI m/m (USD)
Thursday 15:30 (GMT+3) – USA: Retail Sales m/m (USD)
Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)
Friday 17:00 (GMT+3) – USA: Prelim UoM Consumer Sentiment (USD)
Friday 17:00 (GMT+3) – USA: Prelim UoM Inflation Expectations (USD)
Technical Analysis
Since bottoming at 139.880 on April 22, USDJPY has staged a meaningful rebound, initiating a bullish reversal characterized by a failure swing pattern. The higher low at 141.965, followed by a breakout above the previous peak at 144.023, has established a constructive upward trajectory.
Price action has reclaimed the 50-period Exponential Moving Average (EMA), reinforcing bullish sentiment. However, the 20-period EMA has yet to cross above the 50-period EMA, suggesting that a full confirmation of trend reversal remains pending.
Momentum indicators lend support to the developing uptrend. The Momentum Oscillator remains above the 100 mark, indicating sustained buying interest, while the Relative Strength Index (RSI) holds above the 50-neutral level — a sign of underlying strength and potential for further gains.
Overall, while technical conditions favor continued appreciation, the absence of a full EMA crossover warrants a measured outlook in the near term.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
150.683: The initial resistance is 150.683, representing the 423.6% Fibonacci Extension drawn from 144.023 to 141.965.
151.633: The second price target is identified at 151.633, corresponding to the 61.8% Fibonacci Retracement drawn from the high point, 158.864, to the low point, 139.880.
154.796: The third target is established at 154.796, aligning with the peak from February 12.
158.864: An additional price target is estimated at 158.864, which corresponds to the daily high marked January 10.
Potential Downside Targets
Should the sellers take market control, traders may consider the four potential support levels listed below:
145.915: The first level of support is identified at 145.915, representing a peak from May 2.
144.632: The second support level is 144.632, reflecting the weekly Pivot Point estimated using the standard methodology.
144.023: The third support level is identified at 144.023, corresponding to a swing low formed on April 29.
139.880: An additional downward target is observed at 139.880, corresponding to the daily low from April 22.
Fundamentals
The US dollar jumped on Monday after Washington and Beijing agreed to a 90-day mutual tariff reduction, easing fears of a prolonged trade war. The dollar index rose 1.2% to 101.58, while the yen and euro weakened sharply. The risk-on sentiment lifted US stocks and pushed down safe-haven currencies. Despite recent gains, the greenback remains down 2.2% since Trump's April 2 tariff announcement. Traders are now focused on upcoming US inflation and retail sales data, while expectations for Fed and ECB rate cuts have been pushed back to September amid improving economic outlooks.
Conclusion
This week's market tone is firmly set by the US-China tariff truce, which has fueled a risk-on rally and strengthened the US dollar. With key economic data on the horizon — particularly from the US and UK — investor focus will shift to inflation, consumer sentiment, and employment figures for further direction. While technicals in USDJPY signal bullish potential, confirmation is still needed from moving averages and broader macro trends. As markets digest both the trade truce and upcoming economic releases, a cautious yet optimistic stance appears warranted.