CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

• USD/JPY corrects from a nearly two-month peak amid renewed intervention fears.
• A turnaround in the risk sentiment further benefits the JPY and weighs on the pair.
• Reduced bets for a 50 bps Fed rate cut next month should limit losses for the major.

The USD/JPY pair retreats after touching its highest level since August 16, around the 149.10-149.15 area and extends the steady intraday descent through the first half of the European session on Monday. Spot prices, for now, seem to have snapped a three-day winning streak and drop to the 148.00 mark, or a fresh daily low in the last hour. albeit recover a few pips thereafter. 

The Japanese Yen (JPY) strengthens across the board after comments from Japan's Finance Ministry's Vice Finance Minister for International Affairs Atsushi Mimura fueled speculations about a possible intervention. Apart from this, a turnaround in the global risk sentiment, along with escalating geopolitical tensions in the Middle East, drives some haven flows towards the JPY and exerts some downward pressure on the USD/JPY pair. The fundamental backdrop, however, warrants some caution for bearish traders and positioning for any further depreciating move.

Japan’s new Prime Minister Shigeru Ishiba last week said that the country is not ready for further rate hikes. Adding to this, the Bank of Japan (BoJ) board member offered a similar view last Thursday and raised uncertainty about future rate hikes. This, in turn, might cap the JPY. The US Dollar (USD), on the other hand, remains supported near a seven-week high touched in the reaction to the upbeat US jobs report on Friday, which forced investors to further pare bets for another oversized rate cut by the Federal Reserve (Fed). This could further lend support to the USD/JPY pair. 

Traders might also prefer to move to the sidelines ahead of this week's release of the FOMC meeting minutes on Wednesday. Apart from this, the US inflation figures – the Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively – will be looked upon for cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh impetus to the USD/JPY pair. In the meantime, Fedspeak will be looked upon for short-term opportunities in the absence of any relevant data on Monday.

• USD/JPY retreats after touching its highest level since August 16 amid intervention fears. 
• Reduced bets for more BoJ rate hikes and an oversized Fed rate cut should lend support.
• Any meaningful corrective slide could be seen as a buying opportunity and remain limited.

The USD/JPY pair struggles to capitalize on a modest Asian session uptick or find acceptance above the 149.00 mark and retreats a few pips from its highest level since August 16 touched this Monday. Spot prices slide below mid-148.00s, or a fresh daily low in the last hour and for now, seem to have snapped a three-day winning streak, though the fundamental backdrop warrants caution for bearish traders. 

Japan's Finance Ministry's Vice Finance Minister for International Affairs Atsushi Mimura said that the government will monitor FX moves including speculative movement, fueling speculations about a possible intervention. This, in turn, offers some support to the Japanese Yen (JPY) and attracts some sellers around the USD/JPY pair. That said, diminishing odds for another interest rate hike by the Bank of Japan (BoJ) in 2024 and a more aggressive policy easing by the Federal Reserve (Fed) should continue to act as a tailwind for the currency pair. 

New Japanese Prime Minister Shigeru Ishiba stunned markets last week and said that the economy was not ready for further rate hikes. Apart from this, political uncertainty ahead of a general election on October 27 might keep the JPY bulls on the sidelines. Meanwhile, the upbeat US monthly jobs data released on Friday forced investors to further scale back their bets for an oversized rate cut by the Fed in November. This assists the US Dollar (USD) to preserve its recent strong gains to a seven-week top and should act as a tailwind for the USD/JPY pair. 

This, in turn, suggests that any subsequent slide might still be seen as a buying opportunity, making it prudent to wait for strong follow-through selling before confirming that a one-week-old uptrend has run out of steam. Moving ahead, there isn't any relevant market-moving economic data due for release on Monday. That said, speeches by influential FOMC members might influence the USD later during the North American session. Apart from this, geopolitical developments should provide short-term impetus to the USD/JPY pair.

• USD/JPY rallies over 1% after US Nonfarm Payrolls added 254K jobs, lifting US Treasury yields.
• Bulls target a decisive break above 149.39 and 150.00, with next resistance at the 200-DMA of 151.06.
• Support lies at 148.00, followed by the Senkou Span B at 147.78 and the bottom of the Ichimoku Cloud at 146.90-147.00.

The USD/JPY rallied sharply inside the Ichimoku cloud (Kumo) after the US Bureau of Labor Statistics (BLS) revealed that the latest jobs report added over 254K employees to the workforce. This underpinned US Treasury yields, which lifted the exchange rate to current price levels due to their close correlation with the pair. The major trades at 148.73, up by over 1%.

USD/JPY Price Forecast:  Technical outlook

The USD/JPY aimed higher, yet it remains far from turning bullish. Despite this, bulls are in charge in the short term, eyeing a decisive break above the August 15 high of 149.39 and the 150.00 figure.

The Relative Strength Index (RSI) is bullish, aiming upwards, suggesting further upside is seen in the USD/JPY pair.

If buyers clear 150.00, the next resistance would be the 200-day moving average (DMA) at 151.06. On further strength, that will expose the 100-DMA at 151.94.

Conversely, the USD/JPY first support would be the 148.00 figure. Once surrendered, the first support would be the Senkou Span B at 147.78, followed by the bottom of the Kumo at 146.90-147.00.

USD/JPY Price Action – Daily Chart

• USD/JPY breaks above a critical level and extends its bullish advance. 
• Bullish momentum could signal an extension. 
• Alternatively it may have completed a three-wave correction which could eventually roll over. 

USD/JPY breaks clearly above the 147.24 October 3 high on an intraday basis which suggests a continuation of the short-term uptrend with a tentative target at 149.40, the August 15 high.  

USD/JPY Daily Chart 

The strong bullish momentum since the August bottom, as measured by the Moving Average Convergence Divergence (MACD) indicator could indicate the start of a new, longer uptrending move. 

In addition, the robust recovery from the December ‘23 and September lows – which has taken price back above the major trendline for two days and the key September 2 highs – is further evidence of bullishness. 

Alternatively, the pair might also look like it is close to completing an “abc” three-wave corrective pattern of the down move that began after prices rolled over following the July peak. 

A close below the 50-day Simple Moving Average (SMA) at 145.24 would probably indicate a resumption of the medium-term downtrend from the summer. Such a move would be expected to reach the wave B lows at around 141.72.

The US Dollar (USD) is likely to trade in a range, probably between 146.00 and 147.40. In the longer run, boost in momentum suggests USD could rise further to 148.00, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

USD could rise further to 148.00 mid term

24-HOUR VIEW: “After USD soared two days ago, we indicated yesterday that USD ‘is likely to continue to rise.’ We highlighted that ‘resistance levels are at 147.20 and 148.00.’ However, we pointed out that ‘the latter level is probably out of reach for now.’ Our view was not wrong, as USD rose to 147.24, closing at 146.92 (0.31%). Overbought conditions, combined with early signs of slowing momentum suggest USD is unlikely to advance much further. Today, USD is more likely to trade in a range, probably between 146.00 and 147.40.”

1-3 WEEKS VIEW: “Our update from yesterday (03 Oct, spot at 146.55) remains valid. As highlighted, the recent strong in USD has resulted in a boost in upward momentum. This could lead to USD rising to 148.00. To maintain the momentum, USD must remain above 144.80 (‘strong support’ level) previously at 144.00.”

USD/JPY recent rally can be attributed to comments from new PM Ishiba and Governor Ueda. Pair was last at 146.46, OCBC’s FX analysts Frances Cheung and Christopher Wong note.  

Bullish momentum on daily chart intact

“Both sent a coherent message that policymakers are in no hurry to normalise policy. PM Ishiba has also just ordered his cabinet to draw up a comprehensive economic measure. This continues to be aligned with chatters that the PM may be attempting to shore up confidence ahead of snap elections (27 Oct) by drawing up comprehensive economic measures, including a submission of a supplementary budget to parliament after snap elections, talking down prospects of rate hikes and boosting equity markets.”

“On monetary policy, PM Ishiba had earlier said that the economy is not ready yet for another interest rate hike while Governor Ueda had earlier said that upside risk to prices does appear to be easing given the recent yen strength… there’s some time to confirm certain points when making policy decisions, referring to the importance of checking moves in financial markets and the state of overseas economies.”

“He also spoke about range of 140 – 150 for USD/JPY is comfortable. Bullish momentum on daily chart intact but rise in RSI slowed. Immediate resistance at 147.00/20 levels, 148 (38.2% fibo retracement of Jul double-top to Sep low) and 150 levels. Support at 145.20 (50 DMA), 144.80 (23.6% fibo) and 143.35 (21 DMA).”

• USD/JPY enters a bullish consolidation phase near its highest level since August 19.
• Bulls seem reluctant to place fresh bets ahead of the release of the US NFP report. 
• BoJ rate hike uncertainty and reduced bets for a 50 bps Fed rate cut lend support.

The USD/JPY pair is seen oscillating in a narrow range during the Asian session on Friday and consolidating its weekly gains to the highest level since August 19 touched the previous day. Spot prices currently trade below the 147.00 mark, unchanged for the day, as traders opt to move to the sidelines ahead of the release of the closely-watched US monthly employment details.

The popularly known US Nonfarm Payrolls (NFP) report is expected to show that the economy added 140K jobs in September, slightly lower than the 142K in the previous month, and the Unemployment Rate held steady at 4.2%. Apart from this, Average Hourly Earnings will be looked upon for cues about the size of the Federal Reserve's (Fed) rate cut at its next policy meeting in November. This, in turn, will play a key role in driving the demand for the US Dollar (USD) and provide some meaningful impetus to the USD/JPY pair. 

Heading into the key data risk, investors have been scaling back their bets for a more aggressive policy easing by the Fed amid signs of a still resilient US labor market. This pushed the USD Index (DXY), which tracks the Greenback against a basket of currencies, to a one-month top on Thursday. Furthermore, reduced bets for more BoJ rate hikes in 2024, along with the political uncertainty ahead of a snap election in Japan on October 27, could undermine the Japanese Yen (JPY) and act as a tailwind for the USD/JPY pair. 

Nevertheless, spot prices remain on track to register strong gains for the second week in the previous three and barring any big negative surprises from the US jobs data, the fundamental backdrop supports prospects for further gains. That said, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East and the risk of a full-blown war in the region could benefit the safe-haven JPY. This might turn out to be the only factor holding back bullish traders from placing aggressive bets around the USD/JPY pair.

• USD/JPY rises above 147 for the first time since September, driven by escalating Middle East tensions.
• Bullish RSI signals further upside potential, with buyers eyeing resistance at 147.25, followed by 147.78 and 148.00.
• A reversal could see USD/JPY testing support at the 50-DMA of 145.38, with further downside risk at 145.00 and 143.93.

The USD/JPY edges higher on Thursday, climbs above 147.00 for the first time since September, trades at 146.92 and gains 0.31% at the time of writing. The financial markets narrative hasn’t changed, as traders hear war drums beating, as the Middle East conflict escalates, triggering a flow to haven currencies, boosting the Greenback.

USD/JPY Price Forecast: Technical outlook

The USD/JPY daily chart is neutral to downward biased, as buyers tested the bottom of the Ichimoku Cloud (Kumo) at 147.25. Momentum hints that buyers remain in charge, and might push prices higher.

The Relative Strength Index (RSI) is bullish, aiming to the upside. This means, the USD/JPY is tilted to the upside, in the near-term.

The USD/JPY must clear the top of the Kumo at 147.25. In that outcome, the next resistance would be the Senkou Span B at 147.78, followed by 148.00. If those levels are cleared, the 200-day moving average (DMA) would be next at 151.02.

Conversely, if the pair reverses its course, the first support would be the 50-DMA at 145.38. Once surpassed, the next stop would be the 145.00 figure, followed by the Senkou Span A at 143.93.

USD/JPY Price Action – Daily Chart

• USD/JPY gains positive traction for the second straight day and seems poised to climb further.
• The uncertainty over future BoJ rate hikes weighs on the JPY and acts as a tailwind for the pair. 
• Reduced bets for an oversized Fed rate cut in November underpin the USD and remain supportive. 

The USD/JPY pair builds on the previous day's breakout momentum through the 50-day Simple Moving Average (SMA) and attracts some follow-through buyers for the second straight day on Thursday. This also marks the third day of a positive move in the previous four and lifts spot prices to the 147.20-147.25 region, or the highest level since August 20 during the Asian session. 

The Japanese Yen (JPY) is undermined by blunt comments on monetary policy from the new Prime Minister Shigeru Ishiba on Wednesday, saying that Japan is not in an environment for an additional rate increase. Adding to this, Japan's newly appointed economy minister, Ryosei Akazawa, expects the Bank of Japan (BoJ) to make careful economic assessments when raising interest rates again. This, along with the political uncertainty ahead of the October 27 snap election, continues to weigh on the JPY and acts as a tailwind for the USD/JPY pair.

Meanwhile, the US Dollar (USD) manages to preserve this week's strong recovery gains and stands tall near a three-week high amid diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed). In fact, the markets have been scaling back their bets for another oversized Fed rate cut in November in the wake of a still resilient US labor market, reaffirmed by the upbeat ADP report on Wednesday. This is seen as another factor contributing to the bid tone surrounding the USD/JPY pair and supports prospects for additional gains. 

Even from a technical perspective, the overnight sustained break and close above the 50-day SMA, for the first time since mid-July, was seen as a fresh trigger for bulls. Furthermore, positive oscillators on the daily chart validate the constructive outlook and suggest that the path of least resistance for the USD/JPY pair is to the upside. Traders now look forward to the US economic docket – featuring Weekly Initial Jobless Claims and the ISM Services PMI. This, along with Fedspeak, will influence the buck and provide some impetus to the currency pair.

• USD/JPY surges over 2%, rallying from a low of 143.42 following comments from Japan’s Prime Minister Ishiba.
• The pair breaks significant resistance, including the 50-DMA at 145.53, now trading near 146.47.
• For a bearish reversal, USD/JPY needs to drop below the 50-DMA, with 145.00 as the subsequent key support.

The Greenback recovered against the Japanese Yen on Wednesday, rallying over 2% after Japanese Prime Minister Ishiba commented the economic environment is not ready for additional rate hikes. Hence, the USD/JPY jumped off daily lows of around 143.42 and soared sharply toward current exchange rates. At the time of writing, the pair trades at 146.47.

USD/JPY Price Forecast: Technical outlook

The USD/JPY has broken key resistance levels and is descending toward the bottom of the Ichimoku Cloud (Kumo).

Firstly, it broke a resistance trendline drawn from around August 15 highs, which passed at around 144.00/10. Once this was cleared, it opened the door for further upside.

After that, the USD/JPY climbed above the October 1 high of 144.53, followed by the 145.00 figure. Once surpassed, there was not in the bull's path as they exceeded the 50-day moving average (DMA) at 145.53, on its way toward the current exchange rates.

For a bearish resumption, the USD/JPY must clear the 50-DMA on the downside, which will expose the 145.00 mark.

USD/JPY Price Action – Daily Chart

The US Dollar (USD) could continue to trade choppily but is likely to stay within a 140.00/146.00 range, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Likely to stay within a 140.00/146.00 range

24-HOUR VIEW: “On Monday, USD rebounded strongly, reaching a high of 143.91. Yesterday, when USD was at 143.80, we were of the view that it ‘could rebound further to 144.50, but a sustained rise above this level is unlikely.’ We pointed out that ‘support levels are at 143.30 and 142.80.’ Our view was not wrong, as USD rose to 114.53, dropped to 142.96, rebounding to close largely unchanged at 143.56 (-0.04%). The price movements appear to be part of a range trading phase. Today, we expect USD to trade between 142.90 and 144.30.”

1-3 WEEKS VIEW: “Our update from Monday (30 Sep, spot at 142.60) remains valid. As highlighted, the recent buildup in upward momentum has dissipated. From here, USD could continue to trade in a choppy manner, but it is expected to stay within a range of 141.00/146.00 range.”

• USD/JPY closes unchanged at 143.58, forming a ‘doji’ candlestick, signaling indecision amid geopolitical risks.
• RSI suggests potential consolidation, with the pair expected to trade between 142.98 and 144.53 in the short term.
• A break above 144.53 could target 145.00 and the 50-DMA at 145.47, while a drop below 142.98 exposes the 141.65 support level.

On Tuesday, the USD/JPY formed a ‘doji’ and finished the day unchanged at around 143.58. During the session, the major seesawed at around a 150-pip range before ending the trading day with minimal gains of 0.02%.

USD/JPY Price Forecast: Technical outlook

The downtrend remains intact. Even though the pair was headed to sustain losses, the USD/JPY rallied on risk aversion amidst Iran's attack on Israel. That sponsored a leg-up toward the current exchange rate.

The Relative Strength Index (RSI) favors further downside, though its slope is flat. This hints at consolidation ahead. That said, the USD/JPY might trade within the 142.98-144.53 area in the near term.

If buyers clear the top of the range, that will expose the 145.00, followed by the 50-day moving average (DMA) at 145.47. A breach of the latter will expose the bottom of the Kumo at around 147.80-148.00.

Conversely, if USD/JPY tumbles below 142.98, the September 30 cycle low at 141.65 will be exposed. On further weakness, the next stop would be the September 16 pivot low at 139.58.

USD/JPY Price Action – Daily Chart

• USD/JPY aims to recapture 145.00 as Fed Powell smashes large rate cut bets for November.
• The US Dollar bounces back ahead of key US data.
• An absence of immediate plans for more rate hikes in BoJ’s SOP weighed on the Japanese Yen.

The USD/JPY pair gathers strength to extend its upside towards the crucial resistance of 145.00 in Tuesday’s European session. The asset witnesses strong buying interest as the US Dollar (USD) rises further amid uncertainty ahead of the United States (US) Purchasing Managers’ Index (PMI) and the labor market data for September this week, which will indicate whether risks of an economic slowdown are intact.

Market sentiment is cautious as traders rollback bets supporting another large interest rate cut from the Federal Reserve (Fed) in November. S&P 500 futures have posted some losses in European trading hours. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs to near 101.00.

The Fed started its rate-cut cycle with a decline in interest rates by 50 basis points (bps) to 4.75%-5.00% last month. Market participants were anticipating the Fed to continue with an aggressive policy easing stance to prevent further deterioration in job growth.

However, the comments from Fed Chair Jerome Powell on Monday suggested that policymakers are not in rush for reducing interest rates quickly. Powell said that he sees interest rates further declining by 50 bps by the year-end, which indicates that there will be two 25 bps rate cuts in each of the remaining two meetings this year.

On the Tokyo front, the Japanese Yen (JPY) weakens as the Bank of Japan (BoJ) Summary Of Opinions (SOP) of the monetary policy meeting that took place on September 19 indicated that officials have no immediate plans to tighten interest rates further. The BoJ intends to maintain its accommodative stance but remains open to adjustments if economic conditions show significant improvement, BoJ SOP showed.

The US Dollar (USD) could rebound further; a sustained rise above 144.50 is unlikely. In the longer run, upward momentum has dissipated; USD could continue to trade choppily but is likely to stay within a 140.00/146.00 range, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

USD to continue to trade choppily

24-HOUR VIEW: “Yesterday, we indicated that ‘the weakness in USD could retest the 142.00 level before stabilisation is likely.’ We also indicated that ‘a sustained decline below 142.00 is unlikely.’ USD then dropped to 141.63 before rebounding strongly, reaching a high of 143.91 in NY trade. There has been an increase in momentum, and USD could rebound further to 144.50. Today, a sustained rise above this level is unlikely. Support levels are at 143.30 and 142.80.”

1-3 WEEKS VIEW: “Our update from yesterday (30 Sep, spot at 142.60) remains valid. As highlighted, the recent buildup in upward momentum has dissipated. From here, USD could continue to trade in a choppy manner, but it is expected to stay within a range of 141.00/146.00 range.”

• USD/JPY attracts some follow-through buyers for the second straight day on Tuesday.
• Fed Chair Powell’s hawkish remarks on Monday underpin the USD and lend support.
• The uncertainty over the BoJ’s rate-hike path contributes to the modest intraday uptick.

The USD/JPY pair is seen building on the overnight goodish bounce from the 141.65 area, or a nearly two-week low and gaining traction for the second straight day on Tuesday. The move-up lifts spot prices beyond the 144.00 mark during the Asian session and is sponsored by a combination of factors. 

The US Dollar (USD) draws support from the Federal Reserve (Fed) Chair Jerome Powell's relatively hawkish tone on Monday, which forced investors to scale back their bets for another oversized rate cut in November. The Japanese Yen (JPY), on the other hand, remains on the defensive in the wake of comments from Japan's incoming Prime Minister (PM) Shigeru Ishiba, saying that the Bank of Japan's (BoJ) monetary policy must remain accommodative to underpin a fragile economic recovery. 

Furthermore, Ishiba said on Monday that he intends to call a general election on October 27. Apart from this, the underlying bullish sentiment across the global financial markets is seen undermining demand for the safe-haven JPY and acting as a tailwind for the USD/JPY pair. The JPY bulls remained on the sidelines after BoJ's Summary of Opinions from its September meeting revealed that the central bank will adjust its accommodative stance if economic conditions improve.

On the economic data front, Japan's Unemployment rate fell more than expected, to 2.5% in August from 2.7% in the previous month. Adding to this, a closely watched BoJ's Tankan survey showed that sentiment among Japan's big manufacturers was steady in the three months to September and a slight improvement in large non-manufacturers' mood. This, however, does little to provide any impetus to the JPY or the USD/JPY pair, supporting prospects for further intraday gains.

Market participants now look to the US economic docket – featuring the release of the ISM Manufacturing PMI and JOLTS Job Openings data. This, along with speeches by influential FOMC members, will drive the USD demand and produce short-term trading opportunities around the USD/JPY pair. Apart from this, important US macro releases scheduled at the start of a new month, including the Nonfarm Payrolls (NFP) report, should determine the next leg of a directional move.

• USD/JPY gains over 1%, trading at 143.69 after Fed Chair Powell suggests no rush to accelerate rate cuts.
• Despite recent gains, USD/JPY stays under key resistances like the 200-DMA and Ichimoku Cloud, maintaining a bearish outlook.
• Breaking above 144.00 could propel USD/JPY towards 145.00; a pullback to 143.46 and 143.39 is likely if resistances persist.

The USD/JPY climbed late in Monday’s North American session, gaining over 1%, and traded at 143.69 after the Federal Reserve Chair Jerome Powell crossed the newswires.

The Fed Chair said that goods and services inflation is broadly back to pre-pandemic levels, added that the job finding rate declined ‘very significantly,’ and said they don’t need to accelerate rate cuts.

USD/JPY Price Forecast: Technical outlook

The USD/JPY remains downward biased despite registering solid gains and climbing above the Tenkan-Sen and Kijun-Sen, each at 143.46 and 143.39, respectively. Nevertheless, price action remains below the 200-day moving average (DMA) and beneath the Ichimoku Cloud (Kumo), hinting that sellers are in charge.

The Relative Strength Index (RSI) hints that buyers are gathering some steam but will need to clear key resistance levels overhead.

If USD/JPY breaks above 144.00, the next ceiling level will be 145.00, followed by the 50-day moving average (DMA) at 145.92. The next stop would be the bottom of the Kumo at around 148.00-148.20.

Conversely, if USD/JPY remains below 144.00, look for a pullback to the Tenkan-Sen at 143.46. Immediately after this level lies the Kijun-Sen at 143.39, followed by the 143.00 figure.

USD/JPY Price Action – Daily Chart

• USD/JPY soars above 143.00 as Japan Ishiba emphasized the need for an accommodative policy stance.
• Investors await Fed Powell’s speech for fresh interest rate guidance.
• The Fed is expected to cut interest rates further by 75 bps this year.

The USD/JPY pair surges strongly above 143.00 in Monday’s North American session. The asset strengthens as dovish remarks from Japan’s new leader Shigeru Ishiba, who came out victorious in the Prime Ministerial contest on Friday, weighs heavily on the Japanese Yen (JPY).

Shigeru Ishiba said in an interview with public broadcaster NHK in Monday’s Asian trading hours, "From the government's standpoint, monetary policy must remain accommodative as a trend given current economic conditions."

For more interest rate cues, investors will focus on the Bank of Japan (BoJ) Summary Of Opinions (SOP) for the latest monetary policy meeting that took place on September 20. In the monetary policy announcement, the BoJ left interest rates unchanged at 0.1%-0.25% and guided them to remain data-dependent. While investors were anticipating hawkish remarks for the last quarter of the year.

Meanwhile, a slight recovery in the US Dollar has also weighed on the pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, recovers its intraday losses and rises to near 100.50. The Greenback gains ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech, which is scheduled at 17:00 GMT.

Investors will pay close attention to Powell’s interest rate guidance to know how much the Fed will cut interest rates in the remainder of the year.

According to the CME FedWatch tool, the Fed is expected to reduce interest rates further by 75 basis points (bps), suggesting that there will be another 50 basis points (bps) in any of the two remaining meetings in November and December. On September 18, the Fed started its rate-cut cycle with a larger-than-usual cut of 50 bps.

The US Dollar (USD) could rise 145.50; a sustained advance above this major resistance level is unlikely. In the longer run, upward momentum has dissipated; USD could continue to trade choppily but is likely to stay within a 140.00/146.00 range, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

USD likely to stay within a 140.00/146.00 range

24-HOUR VIEW: “Last Friday, we held the view that USD ‘could rise above the major resistance at 145.50, but a sustained advance above this level seems unlikely.’ We were also of the view that ‘the next resistance at 146.10 is unlikely to come into view.’ The subsequent price movements did not turn out as we anticipated; USD soared to a high of 146.49, then quickly plunged to a low of 142.05. The outsized selloff seems to be overdone, but the weakness in USD could retest the 142.00 level before stabilisation is likely. Today, a sustained decline below 142.00 is unlikely. Resistance 143.70; a breach of 144.50 would mean that the weakness has stabilised.”

1-3 WEEKS VIEW: “We shifted to a positive USD stance on 17 Sep (spot at 143.00), indicating that ‘if USD can break above 144.00, it could trigger a stronger recovery towards 145.50.’ As we tracked the advance, in our update from last Friday (27 Sep, spot at 144.95), we indicated that ‘we continue to expect USD to rise to 145.50, but it has to break and maintain a foothold above this level before a further advance is likely.’ We added, ‘given that momentum has not increased much, the chance of it reaching the next major resistance at 147.00 is not high for now.’ We did not anticipate the subsequent volatility, as USD soared to 146.49 and then, in a dramatic reversal, plunged to 142.05. The breach of our ‘strong support’ level at 143.40 indicates that the buildup in upward momentum has dissipated. From here, USD could continue to trade in a choppy manner, but it is expected to stay within a range of 141.00/146.00 range.”

USD/JPY had a choppy session last Friday. Pair was last at 142.64, OCBC FX analysts Frances Cheung and Christopher Wong note.  

Risks skewed to the downside

“Last Friday, USD/JPY traded up to high of 146.49 after candidate Takaichi managed to get into run-off against Ishiba. But it turned out that Ishiba beat Takaichi, who has been vocal against BoJ raising rates. The risk she may win was one of the factors that kept USD/JPY rather supported for most of last week. And as soon as run-off results was known, USD/JPY fell sharply.”

“We still expect the direction of travel for USD/JPY to be down but the BoJ going for a gradual pace of policy normalisation may see pace of USD/JPY decline slow in the short term. To add to uncertainty, PM Ishiba plans to dissolve parliament on 9 Oct and calls for general elections on 27 Oct. Political uncertainty may see Japanese equities fall further, and that may weigh on USD/JPY.” “Bullish momentum on daily chart is fading while RSI fell. Risks skewed to the downside but consolidation likely to hold. Support at 142, 139.60 levels (recent low). Resistance at 143.30 (21 DMA), 144.80 (23.6% fibo retracement of Jul high to Sep low) and 146.20 (50 DMA).”