FundamentalOverview

The USD remains on thebackfoot as the support from the more hawkish repricing in interest ratesexpectations got exhausted. The market is now in line with the Fed’s baselineprojection of two cuts in 2025 and we will likely need strong US data to priceout the remaining rate cuts and give the greenback a boost.

The recent weakness in theUS Dollar got triggered by the weaker than expected US jobless claims figureson Thursday although that might have been an overreaction considering that thedata was still below the cycle high at 260K and continuing claims could get positivelyrevised this 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. That was enough tocalm the markets in the short term and weigh on the yen.

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 rejected the 146.00 handle and it’s now on its way towards the142.35 support zone. If the price gets there, we can expect the buyers to stepin with a defined risk below the support to position for a rally into the148.00 handle. The sellers, on the other hand, will want to see the pricebreaking lower to increase the bearish bets into the 140.00 handle next.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee more clearly the recent price action with the US Dollar selloff helped bythe weaker than expected US jobless claims data on Thursday. There’s not muchelse we can glean from this timeframe so we need to zoom in to see some moredetails.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a minor downward trendline defining the current bearishmomentum. The sellers will likely continue to lean on the trendline to keeppushing into new lows, while the buyers will look for a break higher to starttargeting the 148.00 handle next. The red lines define the average daily range for today.

UpcomingCatalysts

Today, we have the US ISM Manufacturing PMI. Tomorrow, weget the US Job Openings data. On Wednesday, we have the US ADP and the US ISMServices PMI. On Thursday, we get the Japanese wage data and the latest US JoblessClaims figures. On Friday, we conclude the week with the US NFP report.

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