2025-11-06 08:20:00
Fundamental Overview
The USD has been stronger across
the board since the hawkish turn from Fed Chair Powell at the last FOMC press
conference. The repricing in interest rate expectations acted as a tailwind for
the greenback as Treasury yields continued to push higher.
Yesterday, we got a couple
of strong US data. The US ADP beat forecasts (although that was expected) and
the ISM Services PMI came in much better than expected with the price index
pushing into a new cycle high.
Despite the strong data,
the greenback failed to extend the rally. This is generally a signal of a
short-term top with the market needing more to keep the trend going. In fact,
the market pricing is now showing a 60% probability of a December cut, which is
just right. The data in December will probably have the final say and hopefully
we will get an NFP and CPI report before the next FOMC decision.
On the JPY side, the currency
has been weakening since last BoJ policy decision where the central bank left
interest rates unchanged as expected with again two dissenters voting for a
hike. There were no surprises but Governor Ueda focusing on spring wage
negotiations suggested that the next hike could be delayed to January or even
March 2026.
We got some verbal intervention
this week from the Japanese Finance Minister near the 155.00 handle. This is
generally just short-term stuff that provides pullbacks for traders as long as
the conditions for more yen weakness persist. But it shows that the 155.00
level is where the Japanese officials start to draw a line.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY daily
On the daily chart, we can
see that USDJPY pulled back into the 153.27 level and bounced as the buyers
stepped in with a defined risk below the level to position for a rally into new
highs. The sellers will want to see the price breaking lower to pile in for a
drop into the 151.00 support next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see more clearly the bounce around the 153.27 level and the upward trendline. If
we get another pullback, we can expect the buyers to lean on the trendline
again to keep pushing into new highs, while the sellers will look for a break
lower to extend the pullback into the 151.00 support next.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, there’s
not much else we can add here, but we can see that we have a minor
counter-trendline that could turn into a bullish flag in case the price breaks
above it. From a risk management perspective, the buyers will have a better
risk to reward setup around the major trendline, while the sellers will likely need
a downside breakout to increase the bearish momentum. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we conclude the week with the US University of Michigan Consumer
Sentiment report.
