CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

• USD/JPY has broken out of a Broadening Formation pattern and is falling towards its target. 
• The pair has probably reversed its short-term trend and risks now lie to the downside, in line with the bearish bias. 

USD/JPY has breached the bottom of a bearish Broadening Formation price pattern and is falling toward the first downside target at 148.54, the 61.8% Fibonacci extrapolation of the height of the pattern extrapolated down.

USD/JPY Daily Chart 

Further bearishness could carry USD/JPY to the next target at 148.24, the September 2, key swing high.

The (blue) Moving Average Convergence Divergence (MACD) momentum indicator is diverging away from its red signal line – a further bearish sign. 

The short-term trend has probably reversed from bullish to bearish after the breakdown. Given it is a principle of technical analysis that trends have a tendency to extend, the odds now favor more weakness in the short-term. 

• USD/JPY weakens to near 150.95 in Friday’s early Asian session, down 0.35% on the day. 
• The hotter Japan’s Tokyo CPI data could support the case for a BoJ rate hike at its December meeting.
• The cautious stance of the Fed might cap the pair’s downside. 

The USD/JPY pair loses traction to around 150.95 during the early Asian session on Friday. The Japanese Yen (JPY) edges higher after the hotter-than-expected Japan’s Tokyo Consumer Price Index (CPI) inflation report for November. 

Data released by the Statistics Bureau of Japan on Friday showed that the headline Tokyo Consumer Price Index (CPI) climbed by 2.6% YoY in November, compared to 1.8% in the previous month. Meanwhile, the Tokyo CPI ex Fresh Food, Energy rose by 2.2% YoY in November versus 1.8% prior. Tokyo CPI ex Fresh Food increased 2.2% YoY in November, compared to a 1.8% increase in October, and was above the market consensus of 2.1%. 

The core CPI has stayed above the Bank of Japan’s (BoJ) 2% target and kept alive market expectations for a near-term interest rate hike. This, in turn, boosts the JPY and creates a headwind for USD/JPY. BoJ Governor Kazuo Ueda stated the Japanese central bank will keep raising rates if inflation remains on track to stably hit 2% as it projects.

On the other hand, Wednesday's US PCE data indicated that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. This might trigger a modest bounce in the US bond yields, which provides some support to the Greenback. The markets are now pricing in nearly 62.8% odds that the Fed will cut rates by a quarter point in December, up from 55.7% earlier this week, according to the CME FedWatch Tool.

• USD/JPY has fallen to the base of a bearish price pattern. 
• The pair has bounced but remains vulnerable to further downside. 

USD/JPY has fallen to the base of a bearish Broadening Formation price pattern and the 50-day Simple Moving Average (SMA) just below at 150.59, and bounced.

USD/JPY Daily Chart 

A break below the 150.46 November 27 low would cement the breakdown from the pattern and probably lead to more downside toward 148.54, the downside target for the pattern, followed by 148.24 the September 2, key swing high.

The (blue) Moving Average Convergence Divergence (MACD) momentum indicator recently crossed below the red signal line and they are diverging – a bearish indication. 

It is possible the pattern may not have finished forming yet in which case it could be in the process of beginning a new up leg within the boundary lines. This could either rally about half way up before pettering out, or all the way up to the top of the pattern in the 156.00s. It is still too early to say whether either of these outcomes is likely to be the case. 

The US Dollar (USD) is likely to trade in a range between 150.80 and 152.60. In the longer run, downward momentum has surged; deeply oversold conditions suggest 149.40 may not come into view so soon, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Deeply oversold conditions suggest 149.40 may not come into view

24-HOUR VIEW: “When USD was at 153.10 yesterday, we expected it to weaken. However, we pointed out that ‘given the oversold conditions, it may not be able to break clearly below 152.50.’ We underestimated the downward momentum, as USD not only broke below 152.50 but also plunged to a low of 150.44. USD rebounded from the low to close at 151.10, lower by a whopping 1.31%. The outsized decline seems overdone. This, combined with the rebound in deeply oversold conditions, suggests that USD is likely to trade in a range today, probably between 150.80 and 152.60.”

1-3 WEEKS VIEW: “We shifted our outlook from neutral to negative yesterday (27 Nov, spot at 153.10), indicating that USD ‘could edge lower, but it remains to be seen if it can reach 151.60.’ We did not expect the surge in momentum that sent USD plunging to a low of 150.44. Unsurprisingly, there has been a surge in downward momentum. That said, given the deeply oversold short-term conditions, the next support may not come into view so soon. We will maintain our negative USD view as long as 153.00 (‘strong resistance’ level was at 154.35 yesterday) is not breached.”

USD/JPY fell further overnight amid the decline in UST yields and broad US Dollar (USD). Pair was last at 151.90 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to the downside

“Move lower remains in line with our downside bias. Daily momentum is bearish but decline in RSI moderated. Risks remain skewed to the downside but likely the pace may slow. Near term consolidation is likely.”

“Support at 150.70 (50% fibo), 149.20 (100 DMA). Resistance at 152 (200 DMA), 153.30/70 levels (61.8% fibo retracement of 2024 high to low, 21DMA). Data this week brings jobless rate, retail sales and Tokyo CPI. Hotter print on Tokyo CPI may further fuel JPY bulls.”

• USD/JPY is testing the bottom of a probable bearish reversal pattern, attempting to break out. 
• A decisive break below the baseline of the Broadening Formation would signal a reversal and probably more downside. 

USD/JPY has fallen to test the lower border line of a bearish Broadening Formation price pattern (see chart below). The pair looks poised to break out lower. If so, it would signal a reversal of the trend and likely more downside on the horizon.

USD/JPY Daily Chart 

The (blue) Moving Average Convergence Divergence (MACD) momentum indicator has crossed below the red signal line and is diverging – a bearish indication. 

A decisive break below the lower borderline of the Broadening Formation (BF) at about 151.50 would probably indicate a follow through to the target for the pattern at around 148.54. 

A decisive break would be one accompanied by a long red candle that pierced clearly below the level and closed near its lows, or three red candles in a row that broke below the boundary. 

Another possibility is that the pattern has not yet finished forming, in which case it could begin a new up leg within the boundary lines of the BF. This could either rally about half way up before pettering out or all the way up to the top of the pattern in the 156.00s. However, it is still too early to say whether either of these outcomes is likely to be the case. 

USD could weaken; given the oversold conditions. Downward momentum has increased, albeit not significantly, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.

Downward momentum has increased

24-HOUR VIEW: “Yesterday, we indicated that ‘The current price action is likely part of a range trading phase, probably between 153.60 and 154.70.’ Our view was incorrect, as USD tumbled to a low of 152.97 before closing at 153.10 (--0.72%). Strong downward momentum suggests further USD weakness. However, given the oversold conditions, any decline may not be able to break clearly below 152.50. To sustain the momentum, USD must stay below 153.80 (minor resistance is at 153.40).”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (21 Nov, spot at 155.25), wherein USD “is expected to trade in a range, likely between 153.30 and 156.50.” Yesterday, USD broke below 153.30, closing at 153.10. Downward momentum has increased, albeit not significantly. From here, USD could edge lower, but it remains to be seen if any decline can reach the major support at 151.60. Our view will remain the same provided that 154.35 is not breached.”

USD/JPY continued to fall, in line with our bias for downside bias. Pair was last at 151.35 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to the downside

“Daily momentum is bearish while RSI fell. Risks remain skewed to the downside. Support at 150.70 (50% fibo). Resistance at 153.30 (61.8% fibo retracement of 2024 high to low), 153.85 (61.8% fibo), 155 levels.”

“PM Ishiba said that he swapped views with business and union leaders on pay talks and ask businesses to continue with pay hikes. He is also calling for bigger wage deal than this year’s. To add, PPI services came in higher at 2.9% y/y (vs. 2.5% expected). Price-related data, wage growth expectations continue to reinforce our view that BoJ should proceed with another hike next month.”

“Divergence in Fed-BoJ policies should bring about further narrowing of UST-JGB yield differentials and this should underpin the broader direction of travel for USD/JPY to the downside. To add, tariff threats, geopolitical uncertainties are additional drivers that should be supportive of JPY strength.”

• USD/JPY dives to near 151.50 as the US Dollar’s correction extends further.
• The US Dollar refreshes weekly low ahead of the US PCE inflation data for October.
• The BofA sees the pair heading into a longer-term bearish trajectory.

The USD/JPY pair is down around 1%, plummets to near 151.50 in European trading hours on Wednesday. The asset plunges as the US Dollar (USD) extends its correction triggered as market participants anticipated Scott Bessent, United States (US) President-elect Donald Trump’s nomination for Treasury Secretary, will maintain fiscal discipline and political steadiness despite focusing on fulfilling Trump’s economic agenda.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh weekly low near 106.30. Scott Bessent said that he would focus on lowering the budget deficit through spending cuts and enacting tariffs with a “layered in gradually” approach. A move that won’t result in a significant increase in inflation than feared.

Meanwhile, the Bank of America (BofA) advises caution against picking short-term Japanese Yen (JPY) strength as it sees the currency drifting into a longer-term bearish trajectory. The BofA said that policies such as increased tariffs and tighter immigration controls from the incoming US administration could trigger a risk-off environment, initially supporting the yen. However, it anticipates a correction in early 2025 and projects the USD/JPY pair to rise to 160.00 by the end of 2025 on expectations that long-term capital flows from Japan to the US will accelerate in the second half of 2025 due to their deregulatory measures.

Going forward, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for October, which will be published at 15:00 GMT. The PCE report is expected to show that headline and core price pressures accelerated on year, while monthly figures grew steadily.

• USD/JPY tumbles as the US Dollar falls back after a stellar opening.
• US Trump threatens to raise tariffs on Canada and Mexico for providing passage to China to supply illicit drugs in the US economy.
• Investors await the US PCE inflation and the Tokyo CPI data for October.

The USD/JPY pair tumbles to near 153.00 in Tuesday’s North American session. The asset plummets as the US Dollar (USD) gives up its entire intraday gains and turns negative after a strong opening. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 106.50 after a strong opening around 107.50.

The Greenback had a stellar opening after United States (US) President-elect Donald Trump threatened to impose 25% tariffs on Canada and Mexico for providing China a freeway to supply illicit drugs to the United States (US), said in a tweet on Truth.Social. For that, Trump also announced to levy additional 10% tariffs over China above 60%, which he already mentioned in the election campaign.

However, the US Dollar falls back as investors remain confident that Scott Bessent, Trump’s nomination for Treasury Secretary, will maintain political steadiness despite fulfilling the Trump’s economic agenda. Bessent said in an interview with Financial Times (FT) over the weekend that Trump’s policies will not boost inflationary pressures.

Going forward, investors await the US Personal Consumption Expenditure Price Index (PCE) data for October to get fresh cues about the Federal Reserve’s (Fed) likely interest rate action in December, which will be published on Wednesday. Economists expect the inflation data to have accelerated from September readings on an annual basis. Month-on-month headline and core PCE inflation data are estimated to have grown steadily.

Meanwhile, the Japanese Yen (JPY) performs strongly even though traders dial back expectations for the Bank of Japan (BoJ) to hike interest rates in December. Market participants expect that political uncertainty in Japan limits BoJ’s potential for raining its key borrowing rates further. This week, investors will focus on the Tokyo Consumer Price Index (CPI) data for October, which will be published on Thursday.

The current price action is likely part of a range trading phase, probably between 153.60 and 154.70. In the longer run, the US Dollar (USD) is expected to trade in a range, likely between 153.30 and 156.50, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD is expected to trade in a range

24-HOUR VIEW: “We expected USD to edge lower to 153.70 yesterday. However, we indicated that ‘the major support at 153.30 is unlikely to come under threat.’ While our view was not wrong, as USD then dropped to 153.53, it rebounded and subsequently traded choppily. The current price action is likely part of a range trading phase, probably between 153.60 and 154.70.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (21 Nov, spot at 155.25), wherein USD ‘is expected to trade in a range, likely between 153.30 and 156.50.’ There is no change in our view.”

USD/JPY continued to trade lower despite US Dollar (USD) strength seen elsewhere. Pair was last at 153.95 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is mild bearish

“Move lower remains consistent with our downside bias. Tariff threats, geopolitical uncertainties are additional drivers that should be supportive of JPY strength. Daily momentum is mild bearish while RSI fell. Risks skewed to the downside. Support at 153.30 (61.8% fibo retracement of 2024 high to low) and 152 (200 DMA). Resistance at 155.70, 156.60 (76.4% fibo).”

“PM Ishiba said that he swapped views with business and union leaders on pay talks and ask businesses to continue with pay hikes. He is also calling for bigger wage deal than this year’s. To add, PPI services came in higher at 2.9% y/y (vs. 2.5% expected). Price-related data continues to reinforce our view that BOJ should proceed with another hike next month.”

“Divergence in Fed-BoJ policies should bring about further narrowing of UST-JGB yield differentials and this should underpin the broader direction of travel for USD/JPY to the downside.”

• USD/JPY is declining within a potential bearish reversal pattern. 
• Called a “Broadening Formation” such a pattern would have downside implications for price. 

USD/JPY looks like it is falling within an evolving bearish Broadening Formation price pattern (see chart below). 

If this is the case, then the pair is likely to eventually decline towards the lower boundary line of the pattern at around 151.50. After that, it could even break below that line and decline to the projected target for the actual Broadening Formation (BF) itself, at around 148.54.

USD/JPY Daily Chart 

The (blue) Moving Average Convergence Divergence (MACD) is moving lower after crossing below the red signal line – a bearish indication. 

USD/JPY overshot the upper boundary line of the BF on November 14 before quickly falling back down inside it on the following day. This could was probably a sign of exhaustion and is a sign of a coming reversal on the horizon.

That said, it is also possible the pattern could be false. If so, USD/JPY would still be in a strong medium-term uptrend, and given the technical analysis principle that “the trend is your friend” the odds would favor more upside. 

In such a case, a break above 156.25 would likely confirm further gains towards a target at around 157.86 (July 19 high). 

Another possibility is that the major trendline could provide support for price in the 152.90s, slowing its decline to the lower boundary line of the BF.

The US Dollar (USD) is expected to edge below 153.70; the major support at 153.30 is unlikely come under threat. In the longer run, USD is expected to trade in a range, likely between 153.30 and 156.50, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.

USD is expected to trade in a range

24-HOUR VIEW: “Last Thursday, we expected USD to pullback. After USD pulled back, we indicated last Friday that ‘although downward momentum has not increased much, the bias for USD is still tilted to the downside.’ However, we stated that ‘the major support at 153.30 is unlikely to come under threat and that there is another support at 153.70.’ Our view did not turn out, as USD traded between 153.96 and 155.01, closing at 154.74 (+0.15%). Today, it opened and traded lower. We continue to detect a soft bias and expect USD to edge below 153.70. The major support at 153.30 is still unlikely to come under threat. Resistance levels are at 154.55 land 154.90.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (21 Nov, spot at 155.25), wherein USD ‘is expected to trade in a range, likely between 153.30 and 156.50.’ There is no change in our view.”

USD/JPY turned lower, amid pullback in UST yields and USD. Bessent relief is the latest trigger behind the USD pullback. Pair was last at 154.41 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

USD/JPY’s travel may be bumpy

“Last Thu, Governor Ueda mentioned there would be vast amount of data and information between now and the next BoJ meeting, suggesting the December meeting is a live one; he opined that the central bank will seriously assess the impact of FX rate (level) on inflation and the economy. We still look for USD/JPY to trend lower, premised on Fed cut cycle while the BoJ has room to further pursue policy normalisation.”

“On the data front Japan core CPI rose this morning, alongside services PMI, reinforcing our view that BoJ should proceed with another hike next month. Divergence in Fed-BoJ policies should bring about further narrowing of UST-JGB yield differentials and this should underpin the broader direction of travel for USD/JPY to the downside. Elsewhere, escalation in geopolitical tensions may also support safe-haven demand (positive JPY).”

“That said, any slowdown in pace of policy normalisation - be it the Fed or BoJ - would mean that USD/JPY’s direction of travel may be bumpy or face intermittent upward pressure. Daily momentum is mild bearish while RSI fell. Risks skewed to the downside. Support at 153.30 (61.8% fibo retracement of 2024 high to low) and 152 (200 DMA). Resistance at 155.70, 156.60 (76.4% fibo).”

• USD/JPY falls as the Yen gains on expectations the BoJ will raise interest rates in December. 
• Bets are falling meanwhile for the Federal Reserve to cut interest rates, narrowing the differential. 
• This advantages the JPY, creating a headwind for USD/JPY going forward. 

USD/JPY is trading a touch lower in the 154.30s on Friday as the Japanese Yen (JPY) strengthens against the US Dollar (USD) due to the release of higher-than-expected Japanese macroeconomic data, and Tokyo’s announcement of a $250 billion economic stimulus package. 

The Yen’s gains are comparatively limited against the US Dollar, however, which is itself underpinned by a narrative of American exceptionalism, the anticipation of Dollar-positive policies under President elect Donald Trump, and a shallower downward trajectory for US interest rates which is different from the steeper fall expected last month. 

The expectation that interest rates will remain higher for longer in the US is positive for the Greenback because it attracts foreign capital inflows. 

Although Federal Reserve (Fed) officials, including Fed Bank of New York President John Williams and Fed Bank of Boston President Susan Collins, recently said they saw inflation cooling and interest rates falling further, market-based gauges have suggested a lower chance of the Fed reducing rates in December. 

According to the CME FedWatch tool the probability of the Fed making a 25 basis point (bps) (0.25%) rate cut in December has fallen to 59% from previously being 100%. 

In Japan, meanwhile, bets are increasing that the Bank of Japan (BoJ) will raise interest rates in December, when previously investors had not been so sure. 

Japanese Consumer Price Index (CPI) data for October, released overnight, came in broadly stronger, especially in the core measures. 

Japan CPI ex Food, Energy was 2.3% YoY from 2.1% in September, and in the case of CPI ex Fresh Food – which came in at 2.3% – the result was still above the expected 2.2%, although below the 2.5% previously.   

Further, employee pay is expected to improve, fueling growth and spending, according to advisory service Capital Economics, who expect the yearly Shunto pay negotiations to result in large raises and a series of interest rate hikes from the BoJ. 

“The stars are aligning for our long-held view that the Bank of Japan will hike rates again by year-end. And with a recent survey of Japanese firms pointing to even bigger pay hikes in next year's spring wage negotiations than the large one agreed this year, it looks increasingly likely that the Bank's tightening cycle has further to run,” says Marcel Thieliant, Head of Asia-Pacific at Capital Economics. 

Other data from Japan was moderately positive on Friday, with the Japanese Manufacturing Jibun Bank Purchasing Manager Index (PMI) coming in softer at 49.0 compared to the 49.5 forecast, but the Services PMI rising into expansion territory of 50.2 from 49.7 previously.  

Bias for the US Dollar (USD) is tilted to the downside; any decline is unlikely to threaten the major support at 153.30. In the longer run, USD is expected to trade in a range, likely between 153.30 and 156.50, UOB Group’s FX strategists Quek Ser Leang and Lee Sue Ann note.

USD is expected to trade in a range

24-HOUR VIEW: “After USD rose to 155.88 on Wednesday and then pulled back, we indicated yesterday (Tuesday), when it was at 155.25, that it ‘could pull back further, but any decline is likely limited to a test of 154.35.’ Our view of a pullback was not wrong, even though USD declined more than expected to 153.90. Although downward momentum has not increased much, the bias for USD is still tilted to the downside. However, the major support at 153.30 is unlikely to come under threat (there is another support at 153.70). Resistance is at 154.70, followed by 155.00.”

1-3 WEEKS VIEW: “Yesterday (21 Nov, spot at 155.25), we indicated that USD ‘is expected to trade in a range, likely between 153.30 and 156.50.’ We continue to hold the same view. That said, downward momentum has increased somewhat, and the near-term bias is for USD to test the 153.30 support level.”

USD/JPY fell overnight as the pair traded sideways this week. Pair was last at 154.30 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is turning mild bearish

“Geopolitical concerns, Ueda’s comments/ market positioning were some of the factors driving 2-way moves in USDJPY this week. Daily momentum is turning mild bearish while RSI fell. Risks skewed to the downside. Support at 153.80 (21DMA), 153.30 (61.8% fibo retracement of 2024 high to low) and 152 (200 DMA). Resistance at 155.70, 156.60 (76.4% fibo).”

“We still look for USD/JPY to trend lower, premised on Fed cut cycle while the BoJ has room to further pursue policy normalisation. On the data front Japan core core CPI rose this morning, alongside services PMI, reinforcing our view that BoJ should proceed with another hike next month. Divergence in Fed-BoJ policies should bring about further narrowing of UST-JGB yield differentials and this should underpin the broader direction of travel for USD/JPY to the downside.”

“Elsewhere, escalation in geopolitical tensions may also support safe-haven demand (positive JPY). That said, any slowdown in pace of policy normalisation - be it the Fed or BoJ - would mean that USD/JPY’s direction of travel may be bumpy or face intermittent upward pressure.”

• USD/JPY might have evolved a Broadening Formation price pattern. 
• If so it could have bearish reversal potential and see prices fall substantially lower. 

USD/JPY could still be in the process of forming a Broadening Formation pattern with bearish potential. If so, then it is likely to eventually decline towards the lower boundary line of the pattern at around 151.50. Following that, it could even break below that line and decline to the projected target for the Broadening Formation (BF), at around 148.54.

USD/JPY 4-hour Chart 

USD/JPY has overshot the upper boundary line of the BF and this could either be a sign of exhaustion of the uptrend or a sign of bullishness.

It is possible, the pattern could be false and in that case, USD/JPY would still be in a strong medium-term uptrend. If so, given the technical analysis principle that “the trend is your friend” the odds would favor more upside. 

In such a case, a break above 156.25 would likely confirm further gains towards a target at around 157.86 (July 19 high).