- The USD/JPY gains momentum supported by the general strength of the Cólar and high US yields.
- Expectations that the US Federal Reserve would cut rates had been adjusted.
- The ISM services PMI and JOLT job openings will be published soon.
USD/JPY rose more than 0.30% on Monday, although it remains below the Ichimoku (Kumo) cloud, suggesting that the pair is undergoing an upward correction, while the pair resumes its downtrend. Therefore, the pair is trading at 147.23 after hitting a daily low of 146.22.
The pair rebounds and trades at 147.23 as market dynamics change following the latest economic data and signals from the Fed
USD/JPY continues to trade higher, as US Treasury bond yields advance, mainly the benchmark 10-year bond, which rises nearly ten basis points, to 4.289%, which is favorable for the pair. Another factor is that investors have aggressively priced in the US central bank’s rate cuts, according to data from the Chicago Board of Trade (CBOT).
Last Friday, the December 2024 Federal Funds Rate futures contract suggested the US central bank would cut rates by 140 basis points, to 4.105%. However, the same contract has seen a ten basis point jump as investors have reduced rate cut bets by Jerome Powell and company.
In terms of data, US factory orders disappointed investors as the US Department of Commerce revealed a -3.6% contraction in new orders for US-made goods, below September’s 2.3% expansion, also disappointing estimates of a -2.8% contraction. It is the largest monthly drop since April 2020. The data failed to provoke a reaction in the markets, which are awaiting the release of the ISM services PMI on Tuesday, along with employment data.
On the Japanese front, the Yen (JPY) will get direction from the Tokyo inflation report, along with the Jibun Bank Composite and Services PMIs.
USD/JPY Price Analysis: Technical Outlook
The daily chart shows the pair with a neutral bearish bias, with USD/JPY holding below the Kumo. If buyers want to change the bias, they must reclaim key resistance levels as they need to break above the Kumo top, as of today, seen at 149.40. Once this is done, the next resistance would be 149.50 before testing the 150.00 figure.
On the other hand, a drop in USD/JPY below the 147.00 figure could exacerbate a test of the September 11 low at 145.89, ahead of the September 1 daily low at 144.44.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
