UPDATE: The USDJPY currency pair is at a critical juncture as traders await vital economic updates. Following a week of USD weakness, driven by mixed economic signals, market participants are keenly focused on the upcoming ADP and NFP reports, which will heavily influence the next Federal Open Market Committee (FOMC) decision.
Last week, the USD struggled despite a robust performance in the ADP and ISM Services PMI, suggesting a potential short-term market top. Currently, there is a 63% probability of a rate cut in December, according to market pricing, indicating a shift in investor sentiment.
On the other side, the JPY has been under pressure since the last BoJ (Bank of Japan) policy meeting, where officials opted to maintain interest rates. Governor Ueda hinted that further rate hikes could be postponed until January or even March 2026, depending on wage negotiations this spring. This led to verbal interventions from the Japanese Finance Minister near the pivotal 155.00 handle, signaling that this level is critical for Japanese policymakers.
The USDJPY has displayed volatile price action, probing below the 153.27 level before rebounding. Currently, the pair is rangebound below the 155.00 mark, as traders anticipate new catalysts to drive momentum. The daily chart indicates that this range is set to continue unless significant market developments occur.
Looking closely at the 4-hour chart, the price remains above the 153.00 handle, despite a brief drop below the upward trendline last week, which turned out to be a false breakout. Traders are now watching a downward trendline that serves as resistance, where sellers are expected to step in. Buyers are looking for a break above this trendline to bolster bullish positions.
With little data on the calendar this week, focus turns to tomorrow’s weekly ADP data release. Market sentiment remains tense as participants await clarity on the economic outlook, which could have immediate repercussions for both the USD and JPY.
WHAT’S NEXT: Keep an eye on the upcoming economic reports, especially the NFP and CPI releases, as they will likely dictate the direction of the USDJPY in the coming days. The market remains poised for significant movements, with traders eager for signs of strength or weakness from either currency. This situation is developing rapidly, and traders are advised to stay updated on market conditions as they unfold.
