Fundamental Overview
Overall, we’ve seen a rangebound price action in the US Dollar this week as the market awaits new catalysts to push into either direction. The market’s pricing remains mostly unchanged at three rate cuts by the end of 2025 for the Fed.
Yesterday, we saw some strong bids in the greenback late in the day although there wasn’t any catalyst for the move. Those moves are getting erased this morning and we’ll see if that’s going to continue.
On the JPY side, the Japanese CPI today came mostly in line with expectations with inflation being just a bit above the BoJ’s 2% target. The market is pricing a 58% chance of a rate hike in December and a total of 48 bps of tightening by the end of 2025.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY has been mostly rangebound around the 155.00 handle this week. 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 we have an upward trendline where the price got rejected from several times in the past weeks. The buyers will likely continue to lean on it to position for new highs, while the sellers will look for a break lower to position for the break below the key support.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price yesterday broke above a minor downward trendline that was defining the pullback into the major trendline. This might be a signal for new highs ahead but given the rangebound price action, it could also be a false signal. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US PMIs.
