Fundamental Overview
The USD weakened across the
board recently following soft ADP data and a Bloomberg report saying that Hassett emerged as the
frontrunner for the Fed Chair position.
The greenback was already
under some pressure caused by Fed’s Williams endorsement for a December cut last Friday. The
probability for a December cut is now at 76%, which generally makes it a done
deal.
We won’t get much data
before the FOMC meeting, so the focus will likely be mainly on jobless claims
and ADP data, which haven’t been showing any strong improvement. Weak data
should keep weighing on the greenback, while strong data could provide some
short-term support. At the end of the day though, it’s all about the FOMC
decision now and the following NFP and CPI reports.
On the JPY side, nothing
has changed. The currency has been weakening since the last BoJ policy decision
where the central bank left interest rates unchanged as expected with again two
dissenters voting for a hike.
There were no surprises but
Governor Ueda focusing on spring wage negotiations suggested that the next hike
could be delayed to January or even March 2026. The probabilities for a
December hike rose a little to 33% recently as speculation of a possible hike
due to the fast yen depreciation strengthened.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY is bouncing near the trendline as the buyers are stepping in
with a defined risk below the trendline to position for a rally into the 158.87
level. The sellers, on the other hand, will want to see the price breaking lower
to pile in for a drop into the 153.50 support next.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor downward trendline defining the current pullback. The
sellers will likely lean on the trendline with a defined risk above it to target
a break below the major upward trendline. The buyers, on the other hand, will
look for a break higher to increase the bullish bets into the 158.87 level
next.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the price is trading right in the middle of
the two key trendlines, so the market participants will wait for the price to
come into either of those. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we conclude the week with the Tokyo CPI report.
This article was written by Giuseppe Dellamotta at investinglive.com.
