USDJPY, Nasdaq Price Outlook: Is the Ceasefire Priced In?

Is the ceasefire already priced in after a 16% surge in the Nasdaq to new record highs and a 2.8% drop in the DXY toward the 98 support level from yearly extremes? Key levels remain in focus beyond headline noise.

Market Rallies Reach Vulnerable Levels

Markets have rallied sharply, with the Nasdaq reaching a new high near 26,400, while the US Dollar Index (DXY) has retraced toward key support at 98. With trends and momentum now stretched, and crude oil holding firm near the $90 level, upcoming FOMC expectations may become the next driver of volatility. Inflation concerns could resurface, potentially challenging the latest moves across US equities and global currencies.

Markets continue to trade primarily on expectations, with fundamentals acting as a lagging factor unless data significantly deviates from forecasts. This reinforces the importance of focusing on price action over headlines, particularly as extreme sentiment in early April marked a turning point for markets.

The next wave of expectations is likely tied to the FOMC meeting, as energy prices and global supply chains remain under pressure. Meanwhile, sentiment has shifted notably.

Market Sentiment: CNN Fear and Greed Index

Source: CNN

The index has rebounded from extreme fear levels, where equity markets bottomed, into the greed zone, confirming broader trend direction rather than precise positioning. As sentiment shifts, key technical levels become critical in avoiding both bull and bear traps, especially with FOMC-related expectations building.

CME Fed Watch Tool

Source: CME

While markets currently price in little to no expectation of a rate hike at the upcoming FOMC meeting, the latest US CPI increase to 3.3% may influence the tone and forward guidance. At the same time, energy markets and supply chains will require time to normalize, as crude prices hold near $90, even if geopolitical tensions ease. This keeps recent trends, alongside the impact of US earnings, vulnerable in the near term.

USDJPY Price Outlook: Weekly Time Frame – Log Scale

Source: Trading view

USDJPY is navigating a fundamental tension between US dollar strength and Bank of Japan intervention risks. However, technical structure remains the key confirmation tool.

On the weekly chart, USDJPY is consolidating near the 160 level, holding above 158 support, within an ascending channel extending from April 2025 lows.

Bullish Scenario:

A close above 160 could extend gains toward 160.80, 162, and 164. A sustained move above 164 may confirm a breakout from the channel and consolidation range, with a measured move targeting 170.

Bearish Scenario:

A break below the 158–157.40 zone exposes downside toward 156.40 and 154.80, near the lower bound of the channel. A deeper move could target 150–147, aligning with previous consolidation bound.

Nasdaq Price Outlook: Weekly Time Frame – Log Scale

Source: Trading view

The Nasdaq has completed the previous double-top scenario without taking into account the distance of the pattern's shadows, reinforcing market analysis and trading beyond noise.  Price projections now rely on Fibonacci extensions to identify resistance levels.

Bullish Scenario:

A close above the 26,480–26,580 resistance zone, aligning with the 38.2% Fibonacci extension of the April 2025–January 2026–April 2026 move, could open the path toward:

• 27,740 (50% extension)
• 28,900 (61.8% extension)

Bearish Scenario:

Short-term pullback risks may emerge below 26,100, followed by 25,800. A deeper correction could extend toward 25,200 and 24,600.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves