USD/JPY daily chart
The pair may be trading slightly higher today, up 0.2% to 151.50 but that's not really saying much. Looking at the chart above, the latest bounce is coming amid protection of the 100-day moving average (red line). And since then, customers have slowly accumulated more convictions but nothing is due The upside to watch now is the 200-day moving average (blue line), currently seen at 151.97.
Taken together, they account for more than a ping pong field for the couple. The bond market is also seeing some offers this week, so that helps with the slight bounce. The 10-year Treasury yield is now up to 4.21%, with last week's low touching 4.12%. But again, nothing too attractive.
Equally, traders will look to tomorrow's US CPI report to settle the score. That being said, there is a case where we don't learn much from inflation data.
The probability of a Fed rate cut next week is now ~85% and barring any major surprises, Powell & co. they're likely to deliver one final cut before calling it quits early next year.
The bigger question is how much more sustained price pressure from the latest report here will translate into next year's outlook. Trump's taxes also have to be considered, so there's that.
But in the faster term ie for the next week, it should not change the output of the Fed. But we will see how the market reacts. This is not the first time the Fed has been bullied into a decision a week before the FOMC meeting.
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