Fundamental Overview
We continue to see a pullback in the US Dollar as the market kind of reached the peak in the repricing of interest rates expectations and it will need stronger reasons to price out the remaining rate cuts for 2025.
This was signalled by the lack of US Dollar strength after lots of strong US data with the market’s pricing 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 CPI due in two weeks.
On the JPY side, the market is pricing a 56% chance of a rate hike in December and a total of 48 bps of tightening by the end of 2025. Tomorrow, 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 sold off all the way back to the 150.50 level. The buyers are now stepping in with a defined risk below the low to position for a rally into the 160.00 handle next. The sellers, on the other hand, will likely pile in around the 151-152 range to target a drop into a new low.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we now have a downward trendline defining the bearish momentum on this timeframe. If we get a pullback into it, we can expect the sellers to lean on it to position for a drop into new lows. The buyers, on the other hand, will look for a break above the trendline to increase the bullish bets into the 160.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we a minor upward trendline defining the current pullback. The buyers will likely keep on leaning on it to target the major trendline, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow, we conclude the week with the Tokyo CPI.
