Fundamental Overview
The US Dollar got a bit of a boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end remains the base case. The market’s probability for the Fed to cut by 50 bps in November fell from 51% to 40%.
Moreover, overnight the BoJ Summary of Opinions showed that the proponents for rate hikes were more inclined to wait and monitor the developments in the overseas economies and markets.
This week is a big one as we get the US ISM Manufacturing PMI today and the US NFP report on Friday. Positive data will likely see the pair drifting higher on rising Treasury yields, while weak figures should keep the bearish momentum going.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY rallied back to the trendline and it’s now consolidating as we await the key US data. The buyers will likely pile in around these levels to position for a rally into the 150.00 handle, while the sellers will want to see the price falling back below the trendline to keep pushing towards new lows.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a resistance zone around the 145.50 level where the price got rejected from several times in the past weeks. This is where the sellers are stepping in with a defined risk above the resistance to position for a drop into the 140.00 handle. The buyers, on the other hand, will want to see the price breaking higher to position for a rally into the 150.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the rejection from the resistance zone as the sellers are trying to build some momentum to the downside. The US ISM Manufacturing PMI today will be a key report as strong data will likely trigger a rally, while weak figures should increase the bearish momentum. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US ISM Manufacturing PMI and the US Job Openings data. Tomorrow, we have the US ADP report. On Thursday, we get the latest US Jobless Claims figures and the US ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.