Basic overview
The USD got another boost on Friday after the Report on NFP financial results as the data beat expectations almost across the board. The market lowered the rate again cutting expectations more with now only one cut expected before the end of the year.
The focus remains on inflation and this week we get the US CPI report on Wednesday. This is the most important event of the month. Another hot report is likely to cause some trouble in the markets with the stock market looking the most vulnerable at the moment.
The best outcome would be a soft report given the over-extended movements in the markets caused by a payback in expected rate cuts. That would likely reverse most of the recent moves and encourage a rally in bonds, risk assets such as stocks and bitcoin and lead to a sell-off in the US Dollar.
On the JPY side, before the NFP report, we got some headlines
saying that the BoJ was still mulling the rate decision for January and that the central bank was considering raising the inflation forecast.
We saw the JPY gain broadly after the NFP report, which was a bit of a head scratcher, but the market may be thinking that with rising Treasury yields and the US Dollar, the BoJ could delivered an increase earlier than expected.
USDJPY Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can see that USDJPY is still consolidating around the recent highs. From a risk management perspective, buyers will have a better risk to reward position around the main line of motionwhile the sellers will look for a break below the trendline to extend the fall into the 149.00 handle next.
USDJPY Technical Analysis – 4 Hour Time Frame
USDJPY 4 hours
On the 4 hour chart, we can see more clearly the price action range with the price now trading back below 158.00 against. The sellers will now aim to break into the 156.00 support, while the buyers will want to see the price break above the resistance again to position for a rally into the hand 160.00.
USDJPY Technical Analysis – 1 hour timeframe
USDJPY 1 hour
On the 1 hour chart, we can see that we have a small support around the 157.25 level as the price has been rejected several times. The sellers will look for a lower break to increase the bearish bets into the 156.00 support, while the buyers will likely wait for a break above the resistance to get more conviction for new highs. The red lines define the average daily range for today.
Catalysts to come
Tomorrowwe get US PPI data. On Wednesday, we have the US CPI report. On Thursday, we will get the latest US jobless claims numbers.
