Fundamental Overview
The US Dollar remains the strongest currency but overall, we haven’t got much action in the past couple of weeks due to the lack of key catalysts and the market’s pricing remaining largely unchanged around roughly three rate cuts by the end of 2025.
We saw some interesting moves in other major pairs but that was solely due to the weakness of the other currencies. During the Asian session, we saw the greenback getting a bid as Trump said that he will charge Mexico and Canada a 25% tariff on all products coming into the US and will charge China an additional 10% tariff.
On the JPY side, the market is pricing a 62% chance of a rate hike in December and a total of 49 bps of tightening by the end of 2025. On Friday, we get the Tokyo CPI data and an upside surprise could make the BoJ December meeting live.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY has been mostly rangebound around the 155.00 handle. From a risk management perspective, the buyers will have a better risk to reward setup around the 152.00 support to position for a rally into the 160.00 handle next. The sellers, on the other hand, will want to see the price breaking below the support to start targeting new lows.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke below the key upward trendline that was defining the bullish momentum on this timeframe. We can expect the sellers to pile in around these levels to position for a drop into the 152.00 support. The buyers, on the other hand, will want to see the price rising back above the trendline to invalidate the bearish setup and start targeting a new high.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we now have a downward trendline defining the bearish momentum on this timeframe. The sellers will likely keep on leaning on the trendline to position for further downside, while the buyers will look for a break higher to position for a rally into a new high. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Consumer Confidence report and the FOMC Meeting Minutes. Tomorrow, we get the US PCE report and the latest US Jobless Claims figures. On Friday, we conclude the week with the Tokyo CPI.
