Basic overview
The US dollar got a little support yesterday as Fed Chair Powell reiterated that 50 basis points easing by the end of the year remains the base case. The market probability of a 50 basis point Fed cut in November fell from 51% to 40%.
Moreover, the Bank of Japan’s overnight opinion summary showed that supporters of raising interest rates were more inclined to wait and watch developments in external economies and markets.
This week is a big one as we receive the US ISM Manufacturing PMI today and the US NFP report on Friday. Positive data will likely see the pair drift higher as Treasury yields rise, while weak numbers should keep the bearish momentum going.
Technical Analysis of USD/JPY – Daily Time Frame
USD/JPY daily
On the daily chart, we can see that USDJPY has risen back to the trend line and is now consolidating as we wait for key US data. Buyers will likely gather around these levels to position themselves for a rally to the 150.00 handle, while sellers will want to see the price pull back below the trend line to continue the push towards new lows.
Technical Analysis of USD/JPY – 4 Hours Time Frame
USD/JPY 4 hours
On the 4-hour chart, we can see that we have a resistance area around the 145.50 level where the price has been rejected several times in the past weeks. This is where sellers step in with specific risks above the resistance level for the drop to the 140.00 handle. On the other hand, buyers will want to see the price break higher to be able to rise to the 150.00 handle.
Technical Analysis of USD/JPY – 1 hour time frame
USD/JPY 1 hour
On the 1-hour chart, we can more clearly see the rejection from the resistance area as sellers try to build some momentum on the downside. Today’s US ISM Manufacturing PMI will be a key report as strong data will likely trigger a rally, while weak numbers would add to the downside momentum. The red lines mark the average daily range for the day.
Upcoming stimuli
Today we receive the US ISM Manufacturing PMI and US Jobs data. Tomorrow, we have the US ADP report. On Thursday, we will get the latest US unemployment claims numbers and the US ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.