FundamentalOverview

We continue to see apullback in the US Dollar as the market kind of reached the peak in therepricing of interest rates expectations and it will need stronger reasons toprice out the remaining rate cuts for 2025.

This was signalled by thelack of US Dollar strength after lots of strong US data with the market’spricing remaining largely unchanged around three rate cuts by the end of 2025.We might see the greenback remaining on the backfoot at least until the US CPIdue in two weeks.

On the JPY side, the marketis pricing a 56% chance of a rate hike in December and a total of 48 bps oftightening by the end of 2025. Tomorrow, we get the Tokyo CPI data and anupside surprise could make the BoJ December meeting live.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY sold off all the way back to the 150.50 level. The buyers arenow stepping in with a defined risk below the low to position for a rally intothe 160.00 handle next. The sellers, on the other hand, will likely pile inaround the 151-152 range to target a drop into a new low.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we now have a downward trendline defining the bearish momentum onthis timeframe. If we get a pullback into it, we can expect the sellers to leanon it to position for a drop into new lows. The buyers, on the other hand, willlook for a break above the trendline to increase the bullish bets into the160.00 handle.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we a minor upward trendline defining the current pullback. The buyerswill likely keep on leaning on it to target the major trendline, while thesellers will look for a break lower to increase the bearish bets into new lows.The red lines define the average daily range for today.

UpcomingCatalysts

Tomorrow, we conclude the week with the Tokyo CPI.

See the video below