Fundamental Overview
Yesterday, the US Consumer Confidence report surprised to the downside with one of the largest drops since 2021. The labour market data in the report softened a lot and it generally leads the unemployment rate.
The market responded by raising the probabilities for the Fed to cut by 50 bps in November to roughly 60%. The question now is whether this is just about the low hiring rate or something worse? We will have to wait for the NFP report next Friday.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY got rejected from the trendline as the sellers stepped in with a defined risk above it to position for a drop into the 140.00 handle. The buyers will need the price to break above the trendline to start targeting the 150.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we got a break below the counter-trendline yesterday following the weak US consumer confidence report. This turned the bias more bearish and if we get a pullback into the major trendline, we can expect the sellers to lean on it to position for new lows.
The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the 150.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor counter-trendline defining the current pullback. The buyers will likely lean on it to position for a break above 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 get the latest US Jobless Claims figures, while on Friday, we conclude the week with the Tokyo CPI and US PCE.