FundamentalOverview

The US Dollar continues toconsolidate despite the higher-than-expected inflation figures and a lessdovish Powell last week. The market’s pricing remained largely unchanged atthree rate cuts by the end of 2025.

This might be a signal thatthe market is now fine with the current pricing, and we will need strongerreasons to price out the remaining rate cuts. This could lead to some generalUS Dollar weakness in the short term.

On the JPY side, the marketis pricing a 47% chance of a rate hike in December and a total of 45 bps oftightening by the end of 2025. The reason for higher chances for the Decemberhike might be entirely due to the quick Yen depreciation as that was one of themain reasons behind the last hike.

USDJPYTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDJPY probed below the trendline yesterday on some risk aversion buteventually bounced back strongly. The buyers piled in as the price ralliedabove the trendline and keep on targeting the 160.00 handle. The sellers, on theother hand, will want to see the price falling back below the trendline to positionfor a drop into the 152.00 support.

USDJPY TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee more clearly the recent price action with the break below the trendline andthe rally back above it. There’s not much we can glean from this timeframe butwe can expect the buyers to increase the bullish bets on a break above the mostrecent high at 156.80, while the sellers will likely lean on it to position forthe break below the trendline.

USDJPY TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a swing high level at 155.35 that could act as support but thesellers will gain more conviction with a break below the swing level and thetrendline. The buyers, on the other hand, will likely step in around thoselevels to position for new highs. The red lines define the average daily range for today.

UpcomingCatalysts

Tomorrow, we get the latest US Jobless Claims figures, while on Friday weconclude the week with the Japanese CPI and the Japanese and US PMIs.

See the video below