USDJPY Technical Analysis – Awaiting the key US data | Forexlive

Fundamental
Overview

The USD remains a bit on
the backfoot as the support from the more hawkish repricing in interest rates
expectations got exhausted a couple of weeks ago. The market is now in line
with the Fed’s baseline projection of two cuts in 2025 and we will likely need
strong US data to price out the remaining rate cuts and give the greenback a
boost.

The data for now has been
good but not strong enough to make the market to price out the two cuts
expected by year-end. The next key data will be the prices paid component in
the ISM Services PMI today, the US Jobless Claims figures tomorrow, the NFP
report on Friday and the CPI next week.

On the JPY side, the
currency weakened across the board recently after we got the news that Japan
was considering trimming the issuance of super-long bonds but eventually erased
the losses as some trade tensions gave the yen a short term boost.

On the monetary policy
side, the market is still unsure on another rate hike given that it’s pricing
just 18 bps of tightening by year-end. Nonetheless, that’s been creeping up in
the last few weeks supported also by higher than expected Japanese inflation
data. The US-Japan trade deal and the evolution of inflation will be key for
the BoJ.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY bounced around the key 142.35 level as the buyers stepped in to
position for a rally back into the 148.32 level. The sellers will need the
price to break below the 142.35 support
to extend the drop into the 140.00 handle next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price rejected the most recent swing high level at 144.44 where
the sellers stepped in to target a break below the 142.35 level. The buyers
will need the price to break above this level to open the door for a rally into
the 146.28 level next.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor support level at 143.67. That’s where we can expect
the buyers to step in with a defined risk below the level to position for a
break above the 144.44 level. The sellers, on the other hand, will look for a
break lower to increase the bearish bets into the 142.35 level next. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today, we have the US ADP and the US ISM Services PMI. Tomorrow,
we get the Japanese wage data and the latest US Jobless Claims figures. On
Friday, we conclude the week with the US NFP report.

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