Fundamental Overview
The USD has weakened pretty
much across the board last week despite a strong US ADP and ISM Services PMI. As mentioned previously, when
markets react like that it’s generally a signal of a short-term top with the
market needing more to keep the trend going.
In fact, the market pricing
is now showing a 63% probability of a December cut, which is about right. The NFP
and CPI reports will have the final say, and hopefully we will get them before
the next FOMC decision.
On the JPY side, the currency
has been weakening since 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.
We got some verbal
intervention last week from the Japanese Finance Minister near the 155.00
handle. This is generally just short-term stuff that provides pullbacks for
traders as long as the conditions for more yen weakness persist. But it shows
that the 155.00 level is where the Japanese officials start to draw a line.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY probed below the 153.27 level but eventually bounced back above
it. The price action has been kind of rangebound below the 155.00 handle as market
participants await new catalysts.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the rangebound price action above the 153.00 handle. We got a
break below the upward trendline last week, but it turned out to be a fakeout.
There’s not much we can add, so we need to zoom in to see some more details.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a downward trendline acting as resistance. This is where the sellers
are stepping in with a defined risk above the trendline to position for a drop
into new lows. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into new highs. The red lines
define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front. We just have the weekly US ADP
data tomorrow.
Video
This article was written by Giuseppe Dellamotta at investinglive.com.