USD/JPY bounces near the major 155.00 support; pullback or the start of a rally into new highs?

FUNDAMENTAL OVERVIEW USD:The US dollar weakened across the board yesterday following surprisingly dovish comments from Fed Governor Waller. While he adopted a more hawkish stance at the beginning of the summer, yesterday he sounded less inclined to raise rates.He said that he has finally been seeing signs of disinflation and added that he would not want to raise rates into a disinflationary environment. He said he would be willing to wait another month to “give disinflation a chance”. He also mentioned that the September rate decision will depend on the upcoming CPI report. If the data comes in hot, he would consider a rate hike.Rate hike probabilities for the September meeting dropped significantly, with the market now pricing in just a 48% chance of a hike. Following Waller’s comments, I think only a hot CPI report would be enough to push the Fed to hike at the upcoming meeting.Today, we get the US NFP report but given the Fed’s focus on inflation, we will likely need significant upside or downside deviations to see some decent market reaction. In the first case, I would expect the market to go back to pre-Waller levels. In the second case, we should see the market extending yesterday’s moves. JPY:On the JPY side, the currency reportedly strengthened on the back of a hawkish repricing following BoJ Takata’s comments. I don’t think that was the culprit though given that Takata has been the most hawkish member and there’s been minimal repricing in interest rate expectations. More likely, we’ve seen some profit-taking ahead of the key resistance around the 160.50 level on USD/JPY or stealth interventions. In fact, some quick moves happened without any catalyst.  BoJ Governor Ueda has also commented on monetary policyrecently but didn’t offer anything new. In my opinion, his comments were actually a bit less hawkish. Now, the September rate hike is already priced in, so that won’t move the market. Traders will be focused on forward guidance and signals of potential faster pace. The uptrend in USD/JPY is unlikely to change without a dovish repricing in Fed interest rate expectations or a faster BoJ tightening pace. USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that USDJPYdropped all the way back to the key 155.00 support zone. The price bounced as dip-buyers stepped in with a defined risk below the support to position for a rally back into the 160.50 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 152.50 support next. USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see that the bearish momentum increased substantially after the break of the upward trendline, with the price eventually dropping all the way back to the 155.00 support. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we have a downward trendline defining the bearish momentum. We can expect the sellers to lean on the trendline with a defined risk above it to target a break below the support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 160.50 resistance. The red lines define the average daily range for today. UPCOMING CATALYSTSToday, we conclude the week with the US NFP report. This article was written by Giuseppe Dellamotta at investinglive.com.