Fundamental
Overview

The USDJPY pair eventually dropped
back to the August low as a series of soft US data pushed Treasury yields lower
giving the JPY a boost.

The NFP
report on Friday wasn’t bad, on the contrary, the data under the hood was
better than the prior month. Nevertheless, the trend in the labour market
continues to remain skewed to the downside.

The probabilities for the
Fed to cut by 50 bps at the upcoming meeting dropped to 27% following the NFP
report with a total of 110 bps of easing expected by year-end. For the BoJ, the
market sees a 99% probability of no change at the upcoming meeting and a total
of 7 bps of tightening by year-end.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY eventually dropped back to the August low around the 141.70
level. We are now very close to the key 140.20 level. If the price gets there,
we can expect the buyers to step in with a defined risk below the level to
position for a rally into the 150.00 handle. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into new
lows.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price action has been kind of rangebound between the 143.50 and
141.70 levels. If the price were to break higher, we can expect the buyers to
pile in and position for a rally into the trendline
around the 146.00 handle. Conversely, if we were to get a break lower, the
sellers will increase the bearish bets into the 140.20 level targeting a break
below it.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the choppy price action of the last few days. The NFP report
was supposed to trigger a bigger reaction, but given the mixed data, the market
got stuck in a consolidation. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Small Business Optimism Index. On Wednesday, we get the
US CPI report. On Thursday, we have the latest US Jobless Claims figures and
the US PPI data. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.