USDJPY Technical Analysis – We are trading around a key support zone

Fundamental
Overview

We continue to see a
pullback in the US Dollar as the market kind of reached the peak in the
repricing of interest rates expectations and it will need stronger reasons to
price out the remaining rate cuts for 2025.

This was signalled by the
lack of US Dollar strength after lots of strong US data with the market’s
pricing remaining largely unchanged around three rate cuts by the end of 2025.
We might see the greenback remaining on the backfoot at least until the US CPI
due in two weeks.

On the JPY side, the market
is pricing a 56% chance of a rate hike in December and a total of 48 bps of
tightening by the end of 2025. Tomorrow, we get the Tokyo CPI data and an
upside surprise could make the BoJ December meeting live.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY sold off all the way back to the 150.50 level. The buyers are
now stepping in with a defined risk below the low to position for a rally into
the 160.00 handle next. The sellers, on the other hand, will likely pile in
around the 151-152 range to target a drop into a new low.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we now have a downward trendline defining the bearish momentum on
this timeframe. If we get a pullback into it, we can expect the sellers to lean
on it to position for a drop into new lows. The buyers, on the other hand, will
look for a break above the trendline to increase the bullish bets into the
160.00 handle.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we a minor upward trendline defining the current pullback. The buyers
will likely keep on leaning on it to target the major trendline, while the
sellers will look for a break lower to increase the bearish bets into new lows.
The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow, we conclude the week with the Tokyo CPI.

See the video below

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