Fundamental Overview
The USD has been weakening
across the board ever since Fed’s Williams endorsed a December rate cut. The
greenback then extended the losses further following a series of soft US data
that strengthened the case for a December cut.
The probability for a
December cut is now at 86%, which makes it a done deal. Today, we get the US
jobless claims data that are going to be the last important release before the
FOMC decision on Wednesday. Unless we get big surprises, the data won’t change
anything at this point.
At the end of the day, it’s
all about the FOMC decision now and the following NFP and CPI reports.
On the JPY side, the
currency has been gaining ground on the back of Governor Ueda’s comments on
Monday in which he suggested that a rate hike could still be debated, although
there was no clear hint to such a move.
Today, we got a Reuters “leak” citing government sources that the
BoJ is likely to raise interest rates later this month. The market odds for a
December hike jumped to 76% following the report giving the Japanese Yen
another boost.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY daily
On the daily chart, we can
see that USDJPY broke below the upward trendline, opening the door for a
pullback into the 153.50 support. The sellers piled in on the break and will
keep on targeting the support zone. The buyers, on the other hand, should wait
for the price to come into the support to position for a rally back into new
highs with a better risk to reward setup.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have a minor downward trendline defining the current pullback. The
sellers will likely continue to lean on the trendline with a defined risk above
it to keep pushing into the 153.50 support. The buyers, on the other hand, will
look for a break higher to pile in for a rally into the 158.85 level next.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, there’s
not much we can add here, but we can see that the price broke below the 155.00 handle and it’s now extending the drop as more sellers are piling in to target the 153.50 zone. As things stand, the sellers should have free room until the 153.50 support. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we
conclude the week with the University of Michigan Consumer Sentiment report.
