USDJPY Technical Analysis – Awaiting the key US data

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.

Watch the video below