Fundamental Overview
The USD performance this week has been negative despite the decreasing December rate cut odds. We’ve seen also other markets behaving in a strange way, so it’s hard to pinpoint what is really driving the markets at the moment.
The focus now is of course on the Fed and the US data ahead of the December FOMC meeting. The market pricing is now showing a 50/50 chance of a cut in December, so the data will have the final say.
I don't think the September NFP expected to be released next week is going to matter much if it's soft given that it's old data, but a strong report might be taken as meaningful because the market could think that conditions were already getting better in September before the two rate cuts.
Therefore, I think the November NFP is going to have the final say, which will hopefully get released just before the FOMC meeting in December (we won't get the November CPI in time).
On the JPY side, nothing has changed. The currency has been weakening since the last BoJ policy decision where the central bank left interest rates unchanged as expected with again two dissenters voting for a hike. There were no surprises but Governor Ueda focusing on spring wage negotiations suggested that the next hike could be delayed to January or even March 2026.
We got some verbal interventions recently from the Japanese Finance Minister near the 155.00 handle. This is generally just short-term stuff that provides pullbacks for traders as long as the conditions for more yen weakness persist. But it shows that the 155.00 level is where the Japanese officials start to draw a line.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDJPY probed a little above the key 154.80 level but got rejected from the 155.00 handle. We can expect the sellers to continue to step in around these levels with a defined risk above the recent high to position for a drop into the 151.00 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 158.00 handle next.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the bullish momentum. If we get a pullback into it, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 151.00 support.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the sellers will likely continue to pile in around the 154.80 level, while the buyers will have a better risk to reward setup around the trendline. The red lines define the average daily range for today.
