USDJPY Technical Analysis – The greenback is back under pressure | Forexlive

Fundamental
Overview

The USD remains on the
backfoot as the support from the more hawkish repricing in interest rates
expectations got exhausted. 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 recent weakness in the
US Dollar got triggered by the weaker than expected US jobless claims figures
on Thursday although that might have been an overreaction considering that the
data was still below the cycle high at 260K and continuing claims could get positively
revised this 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. That was enough to
calm the markets in the short term and weigh on the yen.

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 rejected the 146.00 handle and it’s now on its way towards the
142.35 support zone. If the price gets there, we can expect the buyers to step
in with a defined risk below the support to position for a rally into the
148.00 handle. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 140.00 handle next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent price action with the US Dollar selloff helped by
the weaker than expected US jobless claims data on Thursday. There’s not much
else we can glean from this timeframe so we need to zoom in to see some more
details.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the current bearish
momentum. The sellers will likely continue to lean on the trendline to keep
pushing into new lows, while the buyers will look for a break higher to start
targeting the 148.00 handle next. The red lines define the average daily range for today.

Upcoming
Catalysts

Today, we have the US ISM Manufacturing PMI. Tomorrow, we
get the US Job Openings data. On Wednesday, we have the US ADP and the US ISM
Services PMI. On Thursday, 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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