Fundamental Overview
The dollar recently got a boost from another hot data set, as US job creation surprised to the upside and the ISM Services PMI index jumped to its highest level since 2023.
Market prices were little changed, however, and the Fed’s Waller yesterday kept hopes of a rate cut on hold, saying the pace would be driven by the progress of inflation. With the central bank’s focus back on inflation, next week’s US CPI report should have a bigger impact on interest rate expectations than tomorrow’s US NFP (barring large deviations).
On the JPY side, the BoJ left interest rates unchanged as expected at the last policy meeting, but Governor Ueda provided less hawkish pressure than expected.
In fact, he put a lot on wages data to decide the timing of the next rate hike, adding that the trend will become clearer in March or April. This forced the market to assess the likelihood of a January hike and push back to the next meeting scheduled for March.
Today, wage data exceeded expectations, although real wage growth is still slightly negative. It gave the JPY a small boost, but nothing serious as we will need more data before the decision in March.
USDJPY Technical Analysis – Daily Time Frame
USDJPY daily
On the daily chart, we can see that the USDJPY is still consolidating around the recent highs even though the price was above the 158.00 resistance. From a risk management perspective, buyers will have a better risk to reward setup around the major trendline, while sellers will look for a break below the trendline to extend the decline into the next 149.00 handle.
USDJPY Technical Analysis – 4 Hour Time Frame
USDJPY 4 hours
On the 4-hour chart, we can see the price action in a range more clearly with price now trading above the 158.00 resistance. Buyers are likely to step around this level with defined risk below it to position themselves for upside at 160.00. Sellers, on the other hand, will want to see the price break below the 158.00 level to target the 156.00 support next.
USDJPY Technical Analysis – 1 Hour Time Frame
USDJPY 1 hour
On the 1-hour chart, we can’t add much more here as buyers will be looking for a bounce and rally in the 160.00 hand, while sellers will be looking for a breakout failure and a run to 156.00 support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we close the week with the US NFP report.