Fundamental
Overview
The US Dollar continues to
consolidate despite the higher-than-expected inflation figures and a less
dovish Powell last week. The market’s pricing remained largely unchanged at
three rate cuts by the end of 2025.
This might be a signal that
the market is now fine with the current pricing, and we will need stronger
reasons to price out the remaining rate cuts. This could lead to some general
US Dollar weakness in the short term.
On the JPY side, the market
is pricing a 47% chance of a rate hike in December and a total of 45 bps of
tightening by the end of 2025. The reason for higher chances for the December
hike might be entirely due to the quick Yen depreciation as that was one of the
main reasons behind the last hike.
USDJPY
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDJPY probed below the trendline yesterday on some risk aversion but
eventually bounced back strongly. The buyers piled in as the price rallied
above the trendline and keep on targeting the 160.00 handle. The sellers, on the
other hand, will want to see the price falling back below the trendline to position
for a drop into the 152.00 support.
USDJPY Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the recent price action with the break below the trendline and
the rally back above it. There’s not much we can glean from this timeframe but
we can expect the buyers to increase the bullish bets on a break above the most
recent high at 156.80, while the sellers will likely lean on it to position for
the break below the trendline.
USDJPY Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a swing high level at 155.35 that could act as support but the
sellers will gain more conviction with a break below the swing level and the
trendline. The buyers, on the other hand, will likely step in around those
levels to position for new highs. 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 Japanese CPI and the Japanese and US PMIs.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
