USDJPY Technical Analysis – Awaiting the key US data
. Fundamental Overview . The USD remains a bit on the backfoot as the support from the more hawkish repricing in interest rates expectations got exhausted a couple of weeks ago.
FundamentalOverview
The USD remains a bit onthe backfoot as the support from the more hawkish repricing in interest ratesexpectations got exhausted a couple of weeks ago. The market is now in linewith the Fed’s baseline projection of two cuts in 2025 and we will likely needstrong US data to price out the remaining rate cuts and give the greenback aboost.
The data for now has beengood but not strong enough to make the market to price out the two cutsexpected by year-end. The next key data will be the prices paid component inthe ISM Services PMI today, the US Jobless Claims figures tomorrow, the NFPreport on Friday and the CPI next week.
On the JPY side, thecurrency weakened across the board recently after we got the news that Japanwas considering trimming the issuance of super-long bonds but eventually erasedthe losses as some trade tensions gave the yen a short term boost.
On the monetary policyside, the market is still unsure on another rate hike given that it’s pricingjust 18 bps of tightening by year-end. Nonetheless, that’s been creeping up inthe last few weeks supported also by higher than expected Japanese inflationdata. The US-Japan trade deal and the evolution of inflation will be key forthe BoJ.
USDJPYTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that USDJPY bounced around the key 142.35 level as the buyers stepped in toposition for a rally back into the 148.32 level. The sellers will need theprice to break below the 142.35 supportto extend the drop into the 140.00 handle next.
USDJPY TechnicalAnalysis – 4 hour Timeframe
On the 4 hour chart, we cansee that the price rejected the most recent swing high level at 144.44 wherethe sellers stepped in to target a break below the 142.35 level. The buyerswill need the price to break above this level to open the door for a rally intothe 146.28 level next.
USDJPY TechnicalAnalysis – 1 hour Timeframe
On the 1 hour chart, we cansee that we have a minor support level at 143.67. That’s where we can expectthe buyers to step in with a defined risk below the level to position for abreak above the 144.44 level. The sellers, on the other hand, will look for abreak lower to increase the bearish bets into the 142.35 level next. The redlines define the average daily range for today.
UpcomingCatalysts
Today, we have the US ADP and the US ISM Services PMI. Tomorrow,we get the Japanese wage data and the latest US Jobless Claims figures. OnFriday, we conclude the week with the US NFP report.
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